| This is a good year for drivers in California. Way back | | | | loan, car insurance companies want a better idea of |
| when in 1988, Proposition 103 received more than | | | | whether you take care of your financial affairs before |
| enough support from voters to pass. Basically, voters | | | | agreeing to pay out if you get in a traffic accident. |
| wanted car insurers to set rates based on the driver's | | | | The first step in setting the auto insurance rate is |
| record and the number of miles driven. Three years | | | | whether you qualify for any discounts. For example, |
| ago, the Commissioner for Insurance introduced new | | | | most companies offer discounts if you can pay an |
| rules prohibiting the use of ZIP codes as the primary | | | | annual premium rather than by monthly or half-yearly |
| factor for determining car insurance rates. These rules | | | | installments. Then comes the math work. There are |
| came into force July 14. This is one battle won for | | | | statistical methods to determine the risk of you getting |
| consumers' rights. The war goes on. Zip codes remain | | | | in an accident. If you're a late payer who gets into |
| a dominant factor in other states. Similarly, insurers also | | | | trouble with liens and mortgages on your property, if |
| check out your credit score. Almost every company | | | | you rent rather than own, you may not take as much |
| seems to think that people with low credit score make | | | | care of your property as others. Add in lack of |
| bad drivers. | | | | consistency in employment and multiple lines of credit |
| So what's going on? Well, it's all about how to define | | | | getting close their the maximums, and you're |
| risk. All the factors go into the melting pot. How old you | | | | considered a higher risk driver. It may not feel fair. It |
| are, where you work, where you live, whether you | | | | probably isn't completely fair. But that's the way |
| own or rent your home, whether you own the car | | | | insurance credit scoring works. |
| outright or have a car loan, what make and model of | | | | So, before you go online for your next car insurance |
| car, and so on. This personal information is included in | | | | quotes, check out your credit score and, if necessary, |
| your credit history. It gives the companies a snapshot | | | | repair the score. The Fair Credit Reporting Act gives |
| of who you are. Is it fair to look at this information? | | | | you the right to get free copies of your credit reports. |
| Unfortunately, yes. Just as a loan company wants to | | | | Use that right and get your credit score into shape |
| know more about you before making the offer of a | | | | before getting quotes. |