This one mistake could cost you $2,200 more on your car insurance premium and has nothing to do with your driving.

Car insurance premiums include many factors, including the driver’s accident history, vehicle make and model, zip code, and personal factors such as marital status and education level. Some of the things that insurance companies associate with increased accident risk may surprise you. Especially since some of them are not directly related to driving at all.

One factor in particular could raise average auto insurance premiums by $2,200 per year. Below we’ll talk about whether it affects you and what to do if it does.

There is a correlation between risky financial behavior and car accidents.

If you’re getting a car insurance quote and wondering why you need to provide your Social Security number, you’ll need to provide it so the insurance company can run a credit check. Car insurance providers in many states look at your credit score when determining the premium they will offer you.

How much this affects driver rates depends on your state and insurance company. However, across the United States, drivers with excellent credit typically pay about $1,947 per year, while drivers with poor credit pay about $4,145 per year for the same coverage. That’s a difference of $2,198 per year.

It may seem strange, but insurance companies claim there is a relationship between your credit score and your likelihood of having a car accident. Many lenders and insurance companies view a low credit score as a sign that someone is making poor financial choices and living beyond their means. These individuals are at greater risk of defaulting on their loans, which some say is indicative of their unnecessary risk-taking nature. As a result, they charge drivers with poor credit more for coverage.

This is a generalization and there will always be some drivers that don’t fit the pattern. That may be why the following states have banned or limited auto insurers from considering your credit score when setting insurance premiums.

• California
• Hawaii
• maryland
• Massachusetts
• Michigan
• Nevada
• oregon
• Utah

Some of these states completely ban the use of credit scores on auto insurance premiums, while others prohibit insurers from denying coverage or not renewing policies based on credit scores. Drivers who live in one of these states should check with their state insurance department to find out how the company uses credit score data. People who don’t live in one of the states above can be assured that insurance companies will take their credit score into consideration when calculating premiums.

How to Increase Your Credit Score

Drivers with poor credit can reduce their insurance premiums over time by increasing their credit scores, but this doesn’t happen overnight. Credit scores are designed to provide a long-term view of how an individual has handled borrowed money, so making the leap from poor credit to excellent credit can take months, if not years. But don’t let that discourage you. Take it one day at a time.

The most important thing you can do to help your credit score is pay your bills on time. Set reminders when absolutely necessary so you don’t forget. You may also consider setting up automatic transfers from your bank account. If you can’t afford your payments, consider reducing your spending and contacting your creditors to see if there’s a way you can avoid falling behind on too many payments.

Secured credit cards can also help you build your credit score over time. This card is an excellent choice for people with no or poor credit history. A deposit will be required, which you can get back when you close your card if you have paid in full. Your credit limit is equal to your deposit. These accounts often have no rewards and may have fees, but regular on-time payments will boost your credit score over time.

Once your credit score has improved a bit, you may want to look into new car insurance. You can find it at a cheaper price than before. Or, if you really like your current insurance company, let the company know that your credit has improved. They may be able to offer you a better deal to avoid losing out to your competitors.

If you still can’t find a rate that fits your budget, keep trying. As your credit builds over time, it should open up opportunities for lower premiums.

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