How Credit Affects Auto Insurance: A Study

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Unless you live in California, Hawaii, Maryland, Massachusetts or Michigan, insurance companies use your credit score to determine your rate. If you have a low credit score, you will undoubtedly pay more for insurance. Why? Insurance companies see a direct correlation between low credit scores and the likelihood of that driver filing an insurance claim in the future. Here’s more on how your credit score affects your premium and how to get the best deal if your credit score is low.

Key Takeaways

  • Poor credit can easily raise your premiums by 70% or more.
  • Except in California, Hawaii, Maryland, Massachusetts and Michigan, every state allows insurers to do a credit check.
  • Your credit score is not affected if you get an insurance quote or switch carriers.

How Much Does My Credit Affect My Insurance Rate?

A low credit score can raise your monthly premium by more than 70%. How much you save exactly depends on your insurance company and where you live (see the chart below). There are no set parameters for how to rate credit scores so it’s worth it to compare rates if your credit score is less than perfect.

What’s a Credit Score and How Is it Determined?

Your credit score is the same thing as your FICO score and is usually between 300 and 850 points. It is a predictor of whether or not you will pay your bills or loan. You will need good credit to buy or lease a car, to rent or buy a home and more.

The points on your credit score are determined based on:

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • How many types of credit in use: 10%
  • Account inquiries: 10%

If you’re not sure what your credit score is, you can ask your bank for your FICO score.

Many will give you the information at no cost. Or you can contact the major credit bureaus on your own: Equifax®, Experian®, and TransUnion®. You are legally allowed one free credit report every 12 months.

Credit Tier Fico Score
Excellent 800-850
Very Good 740-799
Good 670-739
Fair 580-669
Poor 300-579

Insurers use your FICO score to calculate an insurance score, which takes several factors into account, like your driving history, location and age, even gender in some states.

Every insurer’s formula in deriving an insurance score is different. That’s why it’s important to comparison-shop when buying any type of insurance.

Your credit measures risk by showing an insurer how timely you are in paying bills and whether or not you repay your loans.

Overpaying for Auto Insurance? Find a Better Rates!

The Good and the Bad: Low and High Credit Score’s Impact on Premiums in Each State

State Average Premium With the Lowest Tier Credit Score Average Premium With the Highest Tier Credit Score
Alabama $179.87 $120.81
Alaska $194.45 $175.01
Arizona $177.09 $104.46
Arkansas $171.04 $124.83
California $222.70 $178.77
Colorado $197.25 $133.06
Connecticut $237.08 $172.30
Delaware $229.66 $129.28
D.C $374.58 $177.80
Florida $334.17 $206.25
Georgia $207.56 $145.75
Hawaii $148.91 $135.88
Idaho $122.74 $72.59
Illinois $158.38 $89.93
Indiana $116.47 $82.27
Iowa $135.74 $94.20
Kansas $177.57 $125.80
Kentucky $193.35 $129.12
Louisiana $342.32 $231.61
Maine $136.13 $78.59
Maryland $269.31 $141.94
Massachusetts $188.95 $117.29
Michigan $194.84 $116.50
Minnesota $182.55 $103.13
Mississippi $197.77 $120.87
Missouri $169.67 $121.50
Montana $169.82 $129.37
Nebraska $159.42 $109.20
Nevada $205.61 $164.40
New Hampshire $141.64 $98.86
New Jersey $301.45 $150.50
New Mexico $182.24 $112.25
New York $720.03 $165.91
North Carolina $125.64 $103.94
North Dakota $159.06 $96.78
Ohio $127.81 $82.23
Oklahoma $183.90 $131.51
Oregon $156.98 $108.77
Pennsylvania $165.90 $132.03
Rhode Island $245.53 $155.31
South Carolina $197.68 $108.31
South Dakota $176.91 $115.00
Tennessee $159.87 $96.63
Texas $198.88 $127.80
Utah $177.04 $107.31
Vermont $167.45 $90.86
Virginia $148.35 $102.37
Washington $98.03 $89, 32
West Virginia $178.43 $119.04
Wisconsin $146.44 $83.01
Wyoming $266.78 $157.91

Rates were averaged from SmartFinancial’s internal quoting data over the past 365 days.

How To Improve Your Credit Score

  • Catch up on past-due payments as soon as you can.
  • Pay off existing accounts in collection.
  • If you have a high amount of debt compared to the amount of credit available, pay it down.
  • If you have a short credit history or none at all, open a credit card line and pay your bills on time.
  • If you have a high number of credit inquiries, stop signing up for credit cards everywhere you shop! The discounts aren’t worth it!

After you’ve accomplished some or all of these steps, wait a couple of months and you’ll see that your credit score has risen!

Every insurer’s formula in deriving an insurance score is different. That’s why it’s important to comparison-shop.

What Else Do Insurers Look at Besides Credit Scores?

Credit and Insurance FAQs

Does getting an insurance quote negatively affect my credit?

While insurers do look at your credit score to derive an insurance score, it is not a hard pull but a soft one, which will not bring down your credit score. A soft pull only requires basic information and all that an insurer needs to know. A hard pull is a full and detailed summary of your credit and is never required from an insurance company.

If I switch insurers, does it lower my credit score?

No, switching insurers does not affect your credit score. Insurance will only affect your credit score if you do not make payments on time and in full.

Does the type of car I drive affect my credit score?

The type of car won’t affect your credit score but whether or not you made all payments for that car and if they were made on time will affect your credit score. It’s always a good idea to buy a car that fits your budget so you can maintain good credit.

Does paying car insurance on time help build credit?

If you do not make payments on time for car insurance you’ll lower your credit score. However, paying your car insurance alone will not help you build credit but paying a car loan, student loan or credit card on time will.

Even if you have a low credit score, you can pay less on insurance. In fact, most people pay up to 40% more on insurance than if they shopped around for the best value. If you are interested in seeing how low a rate you can get, begin by entering your zip code on this page and answering a few questions.


  1. SmartFinancial’s internal quoting data.
  2. How Much Does Your Credit Scores Affect Your Auto Insurance Rate? Experian. Accessed February 20, 2023.
  3. Credit and insurance scores. The Insurance Information Institute. Accessed February 20, 2023.

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