How Does Your Credit Score Affect Your Car Insurance?
May 8, 2026 | 6 min read
Written By:
Credit Saint
Credit Saint
Staff Writer
With years of experience and a passion for helping clients achieve their financial goals, our team is committed to guiding you on your journey to credit recovery and financial success.
Reviewed By:
Ashley Davison
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world every...
Credit scores affect more than just loans and credit cards.
Your car insurance rates can also be impacted.
Most people know that a credit score affects loan approvals and interest rates — but in most states, a credit score can also influence how much someone pays for car insurance. Insurers use a separate metric called a credit-based insurance score, derived from credit report data, to estimate the likelihood of a policyholder filing a claim. A lower score can mean higher premiums, even with a clean driving record. This guide explains how the connection between credit score and car insurance works, which states restrict it, and what steps may help bring rates down — including how Credit Saint may be able to help if inaccurate credit report entries are affecting a score.
Key Takeaways
According to a 2007 FTC study, credit-based insurance scores are effective predictors of the claims consumers will file — and their use tends to make insurance pricing better reflect actual risk.
In most states, a higher credit-based insurance score is associated with lower car insurance premiums; California, Hawaii, Massachusetts, and Michigan currently prohibit the practice for auto coverage.
The same factors that affect a FICO score — payment history, outstanding debt, credit history length — also shape a credit-based insurance score.
If inaccurate entries on a credit report are suppressing a score, Credit Saint reviews reports across all three bureaus and may challenge them with your authorization — we handle every step.
A credit-based insurance score is a numerical rating used by insurance companies to predict the likelihood of a policyholder filing a claim. It is derived from credit report data — the same information that feeds a standard credit score — but is calculated using a model specifically designed for insurance risk, not lending risk.
The two are related but not identical. A credit-based insurance score considers similar factors — payment history, outstanding balances, length of credit history — but weighs them differently and is used for a different purpose. A FICO score predicts the likelihood of loan default; a credit-based insurance score predicts the likelihood of an insurance claim. For a full breakdown of how standard credit scores are structured, see our guide on what is a credit score range.
How a Credit Score Affects Car Insurance Rates
Insurance companies use the credit-based insurance score as one of several factors — alongside driving record, vehicle type, age, location, and marital status — to calculate premiums. In general, a higher score signals lower risk, which is associated with lower premiums. A lower score suggests higher risk, which tends to result in higher premiums.
The impact can be meaningful. Insurers view consumers with stronger credit profiles as statistically less likely to file claims, and price policies accordingly. This applies even when two drivers have similar vehicles and driving histories — the one with the lower credit-based insurance score may pay more.
It is worth noting that credit-based insurance scores do not factor in race, religion, gender, age, address, or income. The score is based solely on credit history data.
Factors That Shape a Credit-Based Insurance Score
The factors that influence a credit-based insurance score are similar to those that affect a standard credit score:
Payment history: A record of on-time payments is the most significant input. Late or missed payments can negatively affect both a credit score and a credit-based insurance score.
Outstanding debt: High balances or maxed-out credit cards signal financial strain, which insurers may interpret as higher risk.
Length of credit history: A longer, well-managed credit history generally produces a better score.
Credit mix: Having different types of credit accounts — cards, loans — and managing them responsibly can be a positive factor.
New credit: Too many recent applications can temporarily lower a score due to hard inquiries.
Because these factors overlap significantly with FICO scoring, improving a standard credit score will generally also improve a credit-based insurance score over time. For a detailed look at the utilization factor — one of the fastest-moving inputs — see our guide on how credit utilization affects a score.
States Where Credit-Based Insurance Scores Are Restricted
State
Status for Auto Insurance
California
Prohibited
Hawaii
Prohibited
Massachusetts
Prohibited
Michigan
Prohibited
Maryland, Oregon, Washington
Partial restrictions on how credit may be used
All other states
Permitted (subject to state-specific rules)
While most states allow insurers to use credit-based insurance scores for auto policies, a small number currently prohibit or substantially restrict the practice for auto coverage: California, Hawaii, Massachusetts, and Michigan. Residents in these states will not see their auto insurance premiums affected by credit score. Other states, including Maryland, Oregon, and Washington, have partial restrictions on how credit information may be used.
The policy landscape continues to evolve, and additional states have considered legislation that would restrict or ban the use of credit-based insurance scores for auto and homeowners coverage. Consumers in states not on the prohibited list should assume their credit may factor into their auto insurance premiums and check with their state insurance department for the most current rules.
No. Both are derived from credit report data, but they are calculated using different models for different purposes. A FICO score predicts the likelihood of loan default; a credit-based insurance score predicts the likelihood of filing an insurance claim. The factors that influence each are similar, but the weighting differs. Improving a FICO score will generally also improve a credit-based insurance score over time.
In most states, yes. A higher credit-based insurance score — which reflects the same underlying credit data as a standard credit score — is associated with lower car insurance premiums because insurers view it as a signal of lower claim risk. The relationship is statistical, not guaranteed for any individual, and it is one of several factors insurers use alongside driving record, vehicle type, location, and others.
Insurance companies typically check credit when a policy is first applied for, and again at renewal. These checks are soft inquiries — they do not affect a credit score. Only hard inquiries, generated when a consumer applies for new credit, can have a temporary impact on a score.
In most states, a lower credit-based insurance score can still lead to higher premiums even with a clean driving record, because insurers use both factors independently. A strong driving record may offset some of the impact, and different insurers weight these factors differently — shopping around and comparing quotes can help identify more favorable rates. In California, Hawaii, Massachusetts, and Michigan, credit cannot be used in auto insurance rating, so driving record carries more weight.
Yes. Inaccurate entries on a credit report — such as incorrectly reported late payments, duplicate accounts, or accounts that don’t belong to the consumer — can suppress a credit score and, by extension, a credit-based insurance score. Under the Fair Credit Reporting Act (FCRA), consumers have the right to dispute inaccurate information. Credit Saint’s team may be able to review a credit report and pursue challenges with your authorization.
No. When insurance companies pull credit data to generate a quote or evaluate a policy, they use a soft inquiry, which does not affect a credit score. Consumers can compare quotes from multiple insurers without worrying about credit score impact. Only hard inquiries — generated when applying for new credit such as a loan or credit card — can temporarily dip a score.
Reviewed By:
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world everything she knows and learn everything that she doesn’t! Ashley is a FICO® certified professional, a Board Certified Credit Consultant, a Certified Credit Score Consultant with the Credit Consultants Association of America, UDAAP certified, and holds a Fair Credit Reporting Act (FCRA) Compliance Certificate.
