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Car insurance is another reason to aim for a good credit score.
Drivers with bad credit can pay $4,500 more a year for car insurance than drivers with perfect credit, even if they have a flawless driving record, according to an analysis by insurance-comparison website The Zebra.
By comparison, a driver guilty of a hit-and-run would see their car insurance costs go up $2,088 on average.
Drivers with a “very poor” credit score, or under 523 per FICO, pay an average of $6,254 a year for car insurance, compared with drivers with “exceptional” scores, or above 823, who pay $1,673.
Improving a credit score by just one tier can reap 54% in savings in car insurance on average, The Zebra said. Moving from the lowest tier to highest tier can deliver 273% in savings.
Car insurance rate increases based on bad credit vary by state, ranging from as little as a 74% increase in North Carolina to 285% in Minnesota.
