Do They Look at Your Credit Score When Getting Car Insurance
Most insurers use your credit history to help set your rate, but a few states don't allow it at all.
Yes, in most states
Most insurers look at what's called a credit-based insurance score, which is different from the credit score a lender would check. They use it alongside your driving record and other factors to help set your premium.
A handful of states don't allow insurers to use credit at all. If you're in one of those states, your credit history won't come into it no matter which insurer you ask. Your state's insurance department can tell you where your state stands.
Your state decides whether this applies to you
Insurance is regulated state by state, and each state sets its own rules about what insurers can use to price a policy. Some states allow credit-based scoring without restriction. Others limit how much weight it can carry, and a few prohibit it outright.
If you've moved recently, the rule that applied in your old state may not apply in your new one. It's worth checking your current state's rule rather than assuming it carries over.
Your insurer can tell you whether they use credit in your state, and your state's insurance department can tell you what's allowed. Both are worth asking if you want a straight answer.
A credit-based insurance score isn't the same as your credit score
The score an insurer looks at is built differently than the one a bank or credit card company uses. It draws on similar information, like payment history and how much credit you're using, but it's weighted for insurance risk, not lending risk.
This matters because something that helps your regular credit score, like a long history with few accounts, might not move your insurance score the same way. The two scores can move in different directions even though they're built from the same underlying history.
If you want to see what's being used, you can ask your insurer which credit reporting agency they pull from. You're entitled to see that report and correct anything that's wrong on it.
Questions people ask about this
Can I ask my insurer not to use my credit score?
In states where credit-based scoring is allowed, insurers generally aren't required to offer an opt-out. Ask your insurer directly whether they'll quote you without it, since practices vary by company.
Does checking my own credit score affect my insurance rate?
No. Checking your own credit is a soft inquiry and doesn't affect any score, including the one an insurer might use. Only the insurer's own pull of your credit history factors into your rate.
Will a low credit score cancel my existing policy?
A credit score on its own typically isn't a reason for an insurer to cancel a policy already in force. Insurers more commonly use credit at the time you apply or renew. Ask your insurer when they recheck it.
Does paying off debt improve my car insurance rate?
It might, since paying down balances can improve a credit-based insurance score the same way it can help a regular credit score. The effect depends on your overall credit history, not just one account.
Do all insurance companies use credit the same way?
No. Each insurer sets its own formula for how much weight credit carries alongside your driving record, your car, and other factors. That's one reason quotes can vary between companies for the same driver.
If you're not sure how your credit affects your rate, see what other insurers would quote you.
Pull a copy of your credit report so you know what an insurer would see, and fix anything that looks wrong before you apply. Call your current insurer and ask directly whether they use credit-based scoring in your state, and if so, which agency they pull from. Check with your state's insurance department if you want to know whether your state allows the practice at all. If your credit has improved since you last shopped, ask for a new quote rather than assuming your renewal already reflects it. Keep your renewal notice handy so you can compare any new quote against what you're paying now.
