Many insurance providers use the customer's credit report as an important variable when calculating future premiums. So you should definitely keep that in mind when looking for a new insurance policy, because there will be a lot of people looking into your credit report and analyzing all those credit lines and due bills.

The reason for this is that it was statistically proven that there's a direct correlation between a person's credit rating and the probability of the person to file an insurance claim. Auto insurance providers can predict the behavior of any given customer to a certain degree just by seeing their credit report. And it's better when it's good enough.

Sure, it doesn't mean that other important factors won't be taken into account. Your car insurance provider will consider the car make and model, your sex and age, driving record, your location and other important variables that will influence your premiums. So if you don't have a credit record yet, don't worry about getting bad premiums since there are other ways to determine how much you will pay for car insurance. In fact, for some car owners this would be a better option if they don't have a very good credit rating.

Some of you may think that it's a legal offense for the insurance provider to look into your credit report without you knowing it. However, such a practice is supported by the Federal Fair Credit Reporting Act, and car insurance providers are exercising their rights whenever they want. So instead of being offensive about the whole procedure make sure that your credit report won't cause your rates to go up. How would you know if it will? Insurance providers usually pay special attention to some key factors in credit reports:

• public records such as foreclosures, bankruptcy, charge-offs, etc.

• history of past payments

• duration of credit history

• number of credit applications

• number of active credit lines

• types of credit accounts you have

• available credit and how much do you use

The extent to which any given factor will be used when determining your premiums depends on the company you quote with. Some will pay close attention to your public records while others will be more interested in the type of credit you use. So it depends.

If your credit report is not as positive as you would want it to be, you still have the chance of getting lower rates. Fortunately for drivers whose credit rating is not perfect, there are car insurance providers that do not take credit records into account. You can easily find a list of such companies on the web or ask your insurance agent about it.

And don't forget that improving your credit report is also a good way to lower your premiums. Only make sure to do that before looking for new car insurance. Get your credit report, analyze it with a credit expert and take all the possible measures to improve it. For example, if you have too many credit lines you may want to close those unused, or lower the credit amount if you can. After this you will certainly get better car insurance rates with any provider, regardless whether they use your credit rating when determining premiums or not.