A poor credit score could add 20% on to your car insurance bill – but here’s how to fight it
Bear in mind that not all car insurers will accept you for monthly payments if you’ve got a bad credit history
HAVING a poor credit rating could add as much as 20 per cent to your car insurance bill.
This is because some insurers use credit scores to help assess how reliable a customers is.
A poor credit rating can mean you pay more, as according to Tesco Bank, those with a low credit score are statistically more likely to make an insurance claim.
A low rating may also affect the cost of any interest you are charged if you decide to pay for the insurance using monthly instalments – and can increase the cost of your annual policy by as much as 20 per cent.
What’s more, not all insurers will accept you for monthly payments if you’ve got a bad credit history.
“When calculating an insurance premium, we use a variety of rating factors,” said a spokesperson for Direct Line.
“These include personal information about the individual receiving the quote, such as their age and as with other insurers, a credit search is also initiated. The combination of all these factors enables a price to be calculated.
“To ensure an accurate quote is provided, it is essential that all information given is correct.
“If we are unable to verify the information given, it will potentially increase the perceived risk and in turn, the premium quoted.”
So, making sure your credit report is accurate is crucial.
To find out if there are any black marks on yours, you need to look at your credit report.
You can get a statutory copy of your credit file for £2 from one of Britain’s three credit-reference agencies, Equifax, Experian and Callcredit.
You can also get a free credit report by signing up to a a free trial – but remember to cancel at the end of the introduction period (usually 30 days) or you’ll pay a monthly fee.
Things that you should watch out for in your credit report include the details of all your current and previous financial accounts, when you have applied for credit in the past, how much credit you have available to you (in the form of credit cards, for example) and your record of paying off debt.
How to get an error fixed on your credit score
IF your credit rating isn’t in the best shape, don’t panic – there are things you can do to fix it.
For instance, if you spot any mistakes, such as an incorrect address, contact the credit reference agency to set it right. According to the Money Advice Service, they have 28 days in which to remove the information or explain why it will remain on record.
During that time, the “mistake” will be marked as “disputed information” and lenders are not allowed to rely on it when assessing your credit rating.
Similarly, if there’s information on your file that, while accurate, may not reflect your current situation – for example, you got into debt after being made redundant but you are now employed – you can add a “notice of correction” to your credit report.
This is a statement of up to 200 words about what happened.
If you are checking your credit report, you can make some money at the same time by using a cashback website such as or .
There are a wide variety of reasons for checks to take place and your question includes a fair few.
Importantly, though, only checks made to support your actual credit applications leave the type of search footprint that can affect credit scoring.
As a result, checks registered as “insurance quotation”, “ID check” or “unrecorded enquiry” will have no impact on your credit rating at all.
“In the competitive motor insurance market, different insurers take different things into account in different ways when setting premiums,” said Sarah Cordey from the Association of British Insurers.
“Drivers should always shop around to ensure they get the right cover for them at the most affordable price.”
How to improve your credit score
- ONE of the best ways to enhance your credit file while boosting your credit score is to use credit cards well. This means paying for something, like a holiday or computer, using a credit card and paying off the amount in full and on time
- Get on the electoral role. This makes it easier for lenders to identify who you are
- Try not to make multiple applications in a short period of time, as it won’t do your credit file any favours.
- Use some credit on a regular basis, but never take on more than you can afford.
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