Answer (from Consumer Reports): $2,090

A two-car couple with poor credit will pay an extra $2,090, on average, compared to a family with excellent credit. That’s more than what it usually costs to add a teen driver or even the penalty for having two DWIs.

Many people are surprised to discover the various ways that credit scores are used to gauge an individual’s trustworthiness (note that I didn’t say creditworthiness). Now, here’s some evidence that auto insurance companies price risk using credit scores and that a low credit score can really cost you.

I actually just had a insurer who provides homeowner’s insurance ask me for my credit score since they thought they could get me a lower premium. When I sent them my score, I was surprised to see a 30% reduction in my premium. Yay! Another reason to manage your credit well!

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Want to give your students experience reading a credit report? Here’s our Fine Print on Credit Reports.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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