The reason that some insurance companies use credit information is because they feel there is a direct correlation between consumer's credit history behaviors and expected claims that may occur. Therefore, they feel that people with better credit behavior are less likely to severe insurance losses.

Many insurance companies still use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance. Therefore, if you have not established a credit history yet, companies that use credit history may not be best for you. They may not allow you to be eligible for certain discounts, which could result in higher premiums.

The companies that do use credit scoring will still use other factors in determining your premium. They will also use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance.

Is it fair for an insurance company even look at my credit information without my permission? The answer is yes. The Federal Fair credit-reporting act says "Reasonable procedures. It is purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to consumer, with regard to confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with requirements of this title." This can be found at http://www.ftc.gov/os/statutes/fcra.htm

If you feel that your credit history is better then insurer can find, make sure insurer has your correct name, address, social security number, and date of birth.

Some insurance companies will look directly at your actual credit reports when determining your rate, however most will use what is called an "insurance credit score." An insurance credit score is developed by using statistical techniques and methods to predict likelihood a consumer will have a higher than anticipated losses. These are similar to what lenders use to predict reliability of an applicant repaying a loan.

Insurance companies use many factors in determining your credit score. Here are some examples of those factors:

Drivers should take advantage of all discounts that many providers offer, that can significantly reduce cost of car insurance. Understanding discounts and how they can affect auto insurance premiums can help smart shoppers make better decisions about their coverage and possibly save themselves some money in process.

Read below to identify possible discounts that could help you save on auto insurance this year. Other than discounts, there may be some other ways for you to save on your insurance premiums. We will go over several discounts that can help with your current situation.

First, there are discounts for Auto Safety features. Certain states will give you discounts for anti-lock breaks. Make sure you know if it is two or four wheel anti-lock break vehicle. Automatic seatbelts and airbags are frequently discounted on your insurance premiums. In most states, a defensive driver class discount may apply. If principal driver usually 55 years old or older has completed an approved defensive driving class a discount could apply. Keep in mind that most states will only approve this class if it is voluntary meaning that it was not result of a violation or infraction.

Some insurers will give you a discount for having multiple vehicles. In some cases, this will only apply if you have two or more drivers. If you have a clean driving record, meaning you do not have any tickets, accidents or suspensions in last three years (some companies require five years) then you could be eligible for a safe driver's discount.