Is it Possible to Get a Car Insurance with Bad Credit?
Your credit score can dive when you have to pay unexpected medical bills, or you lose your job. It is quite common to have bad credit in Canada, because of the ups and downs of the economy.
When your score is low, it becomes challenging to take car loans from lenders, as you fall under the high-risk category. Fortunately, there are several companies, who are more than ready to give you credit, irrespective of your financial history.
Once you take a loan and purchase a vehicle, the next step is to obtain car insurance. The question you have in mind is whether you can get car insurance, irrespective of your financial history.
Fortunately, you have the freedom to approach an insurance vendor and ask them to cover your vehicle. The premium you have to pay depends on where you live. For instance, if your province doesn’t have any restrictions such as Saskatchewan and Nova Scotia, there is a high chance the insurance provider will examine your credit score. However, in areas such as Labrador, Newfoundland, and Ontario, insurance companies cannot take a look at your credit history. They will have to use other factors to determine your premium. Luckily, vendors taking a look at your score isn’t common practice in Canada.
Why do insurers want to go through your credit score?
The reason is quite simple, just like how financial institutions use a credit score to determine your risk, insurance companies do the same. They believe that your credit score is a direct reflection of how responsible you are when you drive your vehicle. According to insurance vendors, customers with bad credit are more likely to meet accidents. As a result, they find it risky to give you insurance for your vehicle at low rates.
However, you shouldn’t worry because your credit score doesn’t have a huge impact on your premiums. Most vendors look for other factors such as a history of accidents and tickets and driving records.
When it comes to getting coverage for your vehicle, make sure you go through the documents carefully, before putting your signature on them. As your car is precious, you need the right insurance to protect your investment!