Drivers expect insurers to check tickets, accidents, and cars. Many are surprised when credit history shows up too. A strong credit-based insurance score can drop your premium; a weak one can raise it. This guide explains why, what counts, and how to fix it in simple steps.
Credit scoring for insurance is allowed in most states and banned in a few (like California, Hawaii, Massachusetts). If your state allows it, improving your score can lower your rate faster than waiting for a ticket to drop off. Pair these steps with our premium pillar guide.
Insurers use a credit-based insurance score to predict claim risk. It weighs payment history, balances, account age, and inquiries (but not income or race). In states where it's allowed, higher scores usually mean lower premiums. Improve it by paying on time, cutting balances, disputing errors, and avoiding unnecessary new credit.
1) Why insurers use credit
Decades of data show people with lower credit scores file more claims and those claims cost more. Carriers see credit as a risk predictor, similar to mileage or garaging.
- It is about claim likelihood, not driving skill.
- Some states ban or limit credit use; check your state rules.
- Insurance checks are "soft" pulls—they do not hurt your lending score.
2) Insurance score vs credit score
| Feature | Credit score (FICO/Vantage) | Insurance score |
|---|---|---|
| Purpose | Predict loan repayment | Predict claim frequency/severity |
| Inquiry type | Hard pulls can lower score | Soft pull; no score impact |
| Weighting | Focus on debt use and history | Focus on payment consistency and balances |
3) What affects your insurance score
- On-time payments (high impact): Late pays, collections, bankruptcies hurt most.
- Balances vs limits (high impact): Lower utilization helps.
- Length of history (medium): Older accounts show stability.
- New credit (low): Many new accounts in a short time can ding you.
- Credit mix (low): A healthy mix can help.
4.5) What is NOT in your insurance score
- Income, race, gender, religion, or marital status.
- Job title or education level.
- Medical debt specifics (most models soften or exclude it).
- Bank account balances.
4) State rules snapshot
Check if your state limits credit use. Quick guide:
| State | Rule |
|---|---|
| CA, HI, MA | Credit banned in auto rating |
| Most other states | Credit allowed with guardrails |
Use our state-by-state requirements to confirm your rules.
5) Sample premium impact by credit tier
| Profile (same driver/car) | 6-mo premium | Notes |
|---|---|---|
| Excellent credit | $480 | Strong payment history, low balances |
| Good credit | $560 | Small balances, no lates |
| Fair credit | $680 | Higher utilization, few lates |
| Poor credit | $880 | Late pays/collections |
Numbers vary by state and carrier, but the spread shows why cleaning up credit is worth it.
6) Five fast ways to lift your score
- Autopay every bill: On-time history is the biggest factor.
- Cut card balances: Aim under 30% utilization; under 10% is better.
- Dispute errors: Pull all three bureau reports and fix mistakes.
- Pause new credit: Avoid new accounts before shopping insurance.
- Keep old accounts open: Age of credit helps your score.
7) Scripts to ask your insurer
To confirm a soft pull:
"Confirm my insurance quote uses a soft inquiry and won't affect my lending credit score."
To request a rerate:
"I improved my credit. Rerun my credit-based insurance score and tell me the new premium."
If your state bans credit:
"My state restricts credit scoring. Confirm you are not using credit factors in this rate."
8) Pair credit with other savings
Credit is one lever. Combine it with:
- Understanding rate factors so you can challenge errors.
- Re-shopping quotes every renewal.
- Renewal checklist to time rerates.
9) FAQ (fast answers)
Does shopping quotes hurt my credit?
No. Insurance pulls are soft in most states.
Can I opt out of credit use?
Only if your state bans it. Otherwise, focus on improving the score.
Do medical collections count?
Most models reduce their impact, but paid or removed collections still help.
Does freezing credit block insurers?
Usually no, but ask your carrier; some need a temporary lift to read your report.
Will improving credit lower my current term?
Most carriers rerate at renewal. Ask for a rerate once balances drop.
Should I freeze credit while shopping?
You can, but check with each carrier; some need a temporary lift to view reports.
10) Action plan (7 days)
- Pull all three credit reports; dispute errors.
- Set autopay for every bill; calendar due dates.
- Pay cards down below 30% utilization.
- Pause new credit applications until after renewal.
- Ask your insurer for a rerate after balances drop.
- Re-shop quotes with identical limits and deductibles.
- Store the new declarations with your policy binder.
Credit may be controversial, but it is controllable. Tighten payments, trim balances, and request a rerate before your next renewal. Pair these steps with discount stacking and smart shopping so you see the full price drop, not just a better score, and keep proof of every change for your records.