Drivers with poor credit face significantly higher auto insurance premiums, paying an average of $4,644 annually for full coverage—$2,006 more than those with good credit. This disparity can be as high as 148% in states like South Dakota. The insurance industry justifies these higher rates by arguing that poor credit correlates with higher risk, but many advocate against this practice, citing insufficient evidence and the unfair burden it places on marginalized groups. In fact, 48% of credit cardholders carry debt month-to-month, often due to emergencies, which can negatively impact credit scores. While only a few states have banned the use of credit history in insurance pricing, advocacy groups are pushing for broader reforms. Improving one’s credit score can lead to lower insurance costs, and experts recommend checking credit reports for errors, managing debts, and utilizing programs like Experian Boost to enhance credit profiles.
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