Paying car insurance does not technically build credit on its own. But if you use your credit card and make your payments on time, it could have a positive impact on your credit score.
Paying car insurance bills with a credit card
There are a few indirect ways your car insurance bills can impact your credit score, the most straightforward of which involves paying your premium using a credit card. But there are pros and cons to paying your insurance bills this way.
Using a credit card provides a safety net that protects against lapses in your insurance policy. And avoiding missing those insurance payments should be a high priority for any car owner.
In other words, if your credit card has a $1,000 limit, you should generally try to avoid putting $301 or more on that card at any one time. You may want to take this into consideration when deciding whether you should use your credit to pay your car insurance bills.
Can car insurance harm my credit score?
Worse still, a lapse in car insurance can result in big fines from your DMV or even the cancellation of your vehicle’s registration. And if you’re still paying for car loans, your auto lender likely has requirements for maintaining car insurance, which can lead to even more fees, fines, and bigger car loan bills.
Jerry can help you save big on car insurance!
With some thoughtful financial planning, you can take all those car insurance savings Jerry found you and apply them toward improving your credit rating. Paying down your credit cards or loans a bit faster or increasing the limit on a secured card can go a long way toward boosting your credit score. And when it’s time to renew your car insurance, the Jerry app will be ready to help you save again and again.
Does paying car insurance build credit?
While your credit score may factor into your overall premiums depending on where you live, car insurance doesn’t have any direct impact on your credit score.
What payments help build credit?
Car insurance payments won’t affect your credit. The best way to improve your credit is to keep up with your credit card payments and loans (car, school, mortgage, etc.).
Will missing insurance payments hurt my credit?
Not directly, but it can (and usually will) increase your insurance premiums. It can also lead to fees and fines from the insurance company, your state’s DMV, and your lender if you’re still paying for the car’s loan.