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How Does Credit Score Affect Car Insurance Rates in India?

What is a Credit Score?

What is a Credit-Based Insurance Score?

How Does Credit Score Impact Car Insurance Premiums?

Factors That Connect Credit Scores to Car Insurance Premiums

What is a Good Credit Score for Car Insurance?

Does a Bad Credit Score Increase Car Insurance Costs?

Common Challenges Faced by People with Low Credit Scores

Real-Life Example: Comparing Premiums Based on Credit Scores

Let's take two instances, Ravi and Amit. Both Ravi and Amit own the same car, have similar driving histories, and live in the same area. However, their credit scores differ, resulting in varying car insurance premiums.

Credit Score of Ravi: 580 (Fair)

Credit Score of Amit: 810 (Excellent)

The car insurance company only considers the credit score it possesses when determining the monthly premium. This is how their premiums compare:

  • Ravi pays INR 4,000 per month because his credit score falls within the Fair range (580-669), which makes him a high-risk policyholder and results in higher premiums.
  • Amit falls in the Excellent credit score range (800-850) and pays only INR 2000 monthly. A high credit score indicates low financial risk, which ultimately results in lower premiums. 

Here's a table that summarises the monthly car insurance premiums based on credit score ranges in India:

Credit Score Range Credit Score Category Monthly Premium (average)
300-579 Poor ₹5,000
580-669 Fair ₹4,000
670-739 Good ₹3,000
740-799 Very Good ₹2,500
800-850 Excellent ₹2,000

Tips to Improve Your Credit Score for Better Insurance Rates

How to Check Your Credit Score?

FAQs about the Impact of Credit Scores on Car Insurance Premium