Low Credit Score = High Auto Insurance?

Do you think that being a good driver is enough to keep your car insurance low? Think again! A majority of U.S. insurance companies use credit scores or similar tools - called customer ratings or insurance scores - to pick whom they'll cover and how much they charge.

Proponents say credit scoring accurately predicts the likelihood that groups of people will file a future claim for insured damages. They say a bad credit history indicates financial irresponsibility, which translates into irresponsible behavior in other areas.

But for some individuals, it simply doesn't make any sense. For example, people who use little or no credit or pay cash usually end up with low credit scores - and they have to pay more for car insurance because of it.

The point is, a poor credit score can affect your life in many ways. And a car insurance rate is just another example.