Suze Orman Has This Advice for Saving Money on Auto Insurance

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Worried about paying for car insurance? Read on for some key tips from Suze Orman. 

Owning a vehicle is hardly an inexpensive prospect. AAA says it costs $10,728 a year to own a car when you factor in expenses like maintenance and auto insurance. And the latter can be an especially large expense when you buy a new car. So if you want to spend less on auto insurance, you may want to opt for a used vehicle over a new one.

But that’s just one of several steps you can take to save on car insurance. In fact, financial guru Suze Orman has some potentially surprising advice that could result in lower auto insurance premiums

It pays to boost your credit score

It may come as a surprise to learn that most states allow car insurance companies to consider credit scores when calculating premium rates. Now at first, that might seem ridiculous. After all, you’re not asking to take out a personal loan or otherwise borrow money. Rather, you’re asking to pay money in exchange for a service. So why should your credit score matter?

But alas, it often does. The higher your credit score, the more trustworthy you might seem as a consumer. So you may be rewarded with a more competitive rate on your auto insurance.

On the flipside, if your credit is poor, auto insurance could get more expensive for you. So in that case, raising your credit score might result in a fair amount of savings.

How to boost your credit score

If your credit score is a 600, you’re probably not going to get it up to an 800 within days or weeks. But if you’re willing to put in the effort, you may find that over several months, your score is able to climb nicely.

One of the most important things you can do to boost your credit score is pay your bills on time. Of the various factors that go into calculating your credit score, your payment history carries the most weight, so being timely with bills could work to your benefit.

Another good way to raise your credit score? Pay off some existing credit card debt. That’s another big factor that goes into your score.

What’s more, you should check your credit report for errors if you’re looking to give your credit score a lift. Let’s say there’s a debt listed as delinquent on your credit report, only it’s a debt that was never yours in the first place. Settling that matter could result in a fairly quick boost to your score, but you may not know that error is working against you until you actually get a copy of your credit report (which you can do for free) and give it a read.

It may seem counterintuitive that your credit score would play a role in determining your auto insurance premium rate. But since that’s a factor many insurers consider, it’s in your best interest to work on raising your score. Incidentally, that could work to your benefit if you need an auto loan, because the higher your score, the lower an interest rate you might snag in the course of financing a car purchase.

Our best car insurance companies for 2022

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More