Does Credit Score Affect Insurance Rates?
Yes — Most Insurers Use Your Credit Score to Help Set Rates
For most drivers and homeowners, credit score does affect insurance rates. A landmark study found that roughly 95% of all auto and home insurers use a credit-based insurance score as part of calculating what individuals pay for coverage.¹
This means for the vast majority of policyholders, credit score and insurance rates are directly connected — but the rules vary depending on where you live.
Which States Ban the Use of Credit Score for Insurance?
Not every state allows insurers to factor in your credit history. The use of credit-based insurance scores is:
- Banned entirely in Massachusetts, Hawaii, and California
- Limited to certain policy types in some states (for example, only for property insurance like auto or homeowners policies)
- Fully allowed for any type of insurance in other states
Florida residents should check with their insurer or a licensed local agent to confirm exactly how credit-based scoring applies to their auto or home insurance policy, since rules can vary by state and by insurance type.
How Credit Score Affects Insurance Rates
It’s Only One Factor Among Several
Insurance rates based on credit are never determined by credit score alone. Insurers typically weigh a credit-based insurance score alongside other underwriting factors, which vary by policy type.
For does credit score affect car insurance specifically, insurers may also consider:
- Your ZIP code
- The age of the drivers on the policy
- The make, model, and age of the vehicle
- How many miles you drive annually
For does credit score affect home insurance, other underwriting factors will apply based on the property and coverage type.
Why Insurers Use Credit-Based Scores
The practice isn’t arbitrary. It’s based on research showing that individuals with lower credit scores have historically had:
- Higher car insurance losses
- Higher claims payouts
Because of this correlation, insurers use credit-based scores as a way to help predict risk — similar to how they use driving history or property details.
How to Check and Improve Your Credit-Based Insurance Score
Ask Your Insurer If a Credit Score Was Used
You have the right to ask your insurance company:
- Whether a credit-based insurance score was used to underwrite and rate your policy
- Which risk category you were placed in as a result
Steps to Improve Your Score
If you want to improve your credit score insurance rates standing, the same habits that improve your general credit rating will help:
- Make timely debt payments
- Resolve past disputes on your credit report
- Keep credit card balances low
Frequently Asked Questions
Does credit score affect insurance rates?
Yes. About 95% of auto and home insurers use a credit-based insurance score as one factor in determining insurance rates, though the exact impact depends on your state and insurer.¹
Does credit score affect car insurance rates specifically?
Yes, in most states. Insurers typically combine your credit-based insurance score with other factors like ZIP code, driver age, and vehicle details to price auto insurance.
Does credit score affect home insurance rates?
In most states, yes. Home insurers generally use a credit-based insurance score alongside other property-related underwriting factors, unless your state restricts or bans this practice.
Which states don’t allow credit score to affect insurance rates?
Massachusetts, Hawaii, and California ban the use of credit-based insurance scores altogether. Some other states limit its use to specific insurance types, such as property insurance.
How can I find out if my insurer used my credit score?
You can ask your insurance company directly whether a credit-based insurance score was used to underwrite and rate your policy, and which risk category you were assigned.
How can I improve my credit-based insurance score?
Take the same steps that improve your general credit rating: make timely debt payments, resolve past disputes, and keep credit card balances low.
1. Predictive Analytics: Achieving Greater Decision Accuracy, Better Risk Segmentation, and Greater Profitability, Fair Isaac Corporation, 2012 (most recent statistics available).
The content is developed from sources believed to be providing accurate information. This information is not intended as tax or legal advice and may not be used for the purpose of avoiding any federal tax penalties. Please consult a legal or tax professional regarding your individual situation. The opinions expressed and material provided are for general information only and should not be considered a solicitation for the purchase or sale of any security.
