How Your Credit Score Could Be Steering Your Auto Insurance Rates

When it comes to setting auto insurance premiums, most people expect factors like age, driving history, and vehicle type to play a role. But there’s another factor quietly influencing what you pay: your credit score.

Yes, in most U.S. states, insurers use your credit-based insurance score to help determine your risk—and therefore, your rates. While this may seem surprising, it’s a widespread practice that can either work in your favor or cost you more if you're not paying attention.
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Below, we explain how and why your credit affects your car insurance premiums—and what you can do to improve both.

What Is a Credit-Based Insurance Score?
A credit-based insurance score is not the same as your FICO or VantageScore, but it’s derived from similar data. It helps insurers predict how likely you are to file a claim.

Key factors include:

• Payment history
• Length of credit history
• Outstanding debt
• Types of credit in use
• Number of recent inquiries

Insurance companies use this information, combined with driving history and location, to assess your level of financial responsibility—which they correlate with claim risk.


States Where It’s Allowed and Restricted
Most states allow insurers to use credit-based scores when determining auto insurance rates. However, some states restrict or ban the practice:

• Banned: California, Hawaii, Massachusetts, and Michigan
• Restricted use: Maryland, Oregon, and Washington (varies by regulation)

If you live in one of these states, your credit history won’t influence your premium—or will only play a limited role.


How Your Credit Can Affect Rates

1. Higher Credit Score = Lower Premiums
   Statistically, drivers with good credit tend to file fewer and less costly claims, which insurers reward with better rates.
   
   
2. Poor Credit Can Raise Rates Significantly
   According to studies, drivers with poor credit can pay up to 60–100% more than those with excellent credit—all other factors being equal.
   
   
3. Credit Isn’t Used Alone
   Insurers still consider your driving record, age, vehicle, and location. Credit is just one piece of the puzzle—but an important one.

What You Can Do to Improve Your Score (and Rates)

1. Pay bills on time
   Your payment history has the biggest impact on your credit score.
   
   
2. Reduce credit card balances
   Keep utilization under 30% of your available credit limit.
   
   
3. Avoid opening too many new accounts
   Each application causes a small, temporary drop in your score.
   
   
4. Check your credit reports for errors
   Dispute any inaccuracies through Equifax, Experian, or TransUnion.
   
   
5. Ask your insurer if they use credit scoring
   Knowing how your provider calculates rates can help you strategize.

Common Myths

• “Insurers check your full credit report.”
  → False. They only perform a soft pull, which doesn’t affect your score.
  
  
• “Bad credit means I won’t get insured.”
  → False. You’ll still get coverage, but likely at a higher premium.
  
  
• “Once I get my rate, it stays the same.”
  → Not necessarily. Your rate may change at renewal if your credit improves—or declines.

Final Thoughts
Your credit score doesn’t just influence your ability to get a loan—it can also steer your auto insurance premiums up or down. By understanding this relationship and taking steps to maintain or improve your credit, you may be able to lower your car insurance costs over time.

Next steps:

• Check your credit reports
• Ask your agent how your score affects your rate

Because on the road to affordable insurance, your credit might just be in the driver’s seat.

At Harvest Insurance Group, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get insurance that fits your needs. Get in touch with our company at (940) 441-7157 to learn more about our offerings. Today, by CLICKING HERE, you may get a free estimate.

Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.​