Does your credit score affect your car insurance?
Your credit score can affect how much you pay for car insurance. In most states, insurance companies use something called a credit-based insurance score to help determine your rate. Drivers with lower scores often end up paying more, even if they have a clean driving record. Not every state allows this practice, though, so the impact depends on where you live.
Here’s how your credit score affects your car insurance rates — and what you can do about it.
How your credit score affects car insurance rates
Your credit score isn’t used to directly set your car insurance premium. But it does play a role in how insurers evaluate risk.
Around 95% of auto insurance companies use credit-based insurance scores in the states where it’s allowed, according to FICO. Around 75% of these insurers say using a credit-based insurance score results in lower premiums for their customers, according to the National Association of Insurance Commissioners (NAIC).
Why are insurance companies looking at your credit score? It’s because data shows a correlation between lower credit scores and a higher likelihood of filing claims. Insurers then charge higher rates to offset that risk. This is why two drivers with identical records — same age, same car, same driving history — can end up with very different premiums based on their credit alone.
What is a credit-based insurance score?
A credit-based insurance score is a version of your credit profile that’s used specifically for insurance pricing. It’s not exactly the same as the credit score lenders use, but it’s built from similar information, including:
- Your payment history
- How much debt you’re carrying
- The length of your credit history
- Recent new credit activity
- The types of credit you have
Insurance companies use this as one piece of a larger formula to predict risk. While your credit-based insurance score doesn’t determine your rate on its own, it can still impact how much you pay for car insurance.
Average car insurance rates by credit score
On a national level, research shows that drivers with very poor credit pay quite a bit more than those with excellent credit, even if everything else about them is the same. For example, here’s how much drivers with the same driving record pay for insurance based on their credit, according to data from The Zebra, an insurance marketplace:
- Drivers with exceptional credit (above 823) pay an average of $1,673 per year.
- Drivers with very poor credit (below 523) pay an average of $6,254 per year — a difference of $4,581 (or roughly 273% more) for having a lower score.
Here’s how average car rates break down by credit score, according to The Zebra:
| Credit tier | Avg. 6-month premium | Rate increase by percentage (between credit tiers) |
|---|---|---|
| Excellent | $813 | N/A |
| Average | $1,149 | +41% |
| Fair | $1,291 | +59% |
| Poor | $2,163 | +166% |
| Very poor | $2,578 | +217% |
*Data collected from The Zebra
The real cost of poor credit on car insurance
The percentage increases in the table above can feel abstract, but the dollar impacts are real. Here’s how much drivers with the same driving record pay for insurance based on their credit, according to The Zebra:
- Drivers with exceptional credit (above 823) pay an average of $1,673 per year.
- Drivers with very poor credit (below 523) pay an average of $6,254 per year — a difference of $4,581 (or roughly 273% more) for having a lower score.
To put this in perspective, having poor credit can raise your insurance rate more than certain driving violations, according to The Zebra. In some cases, the difference in premiums tied to credit is even higher than the increase after a serious incident like a hit-and-run.
Learn: What is a good credit score?
Other factors that affect your car insurance rates
Your credit score is just one piece of the puzzle. Insurance companies look at several elements in addition to your credit-based insurance score when pricing your policy.
Some of the biggest factors that affect your insurance rates include:
- Your driving record: Accidents, speeding tickets, and other violations can raise your rate — sometimes significantly. The cleaner your record, the better for your premiums.
- Your age and driving experience: Younger drivers (especially teens) tend to pay more because they’re statistically more likely to file claims.
- Where you live: Rates can vary a lot based on your ZIP code. Areas with higher accident rates, higher theft incidents, or severe weather typically come with higher premiums as a result.
- The car you drive: Expensive vehicles, cars with high repair costs, or models that are frequently stolen tend to cost more to insure.
- Your coverage choices: Higher coverage limits and lower deductibles usually mean higher premiums. On the flip side, raising your deductible can lower your monthly cost.
- How much you drive: The more time you spend on the road, the higher your risk of an accident, which can increase your rate.
States that don’t use credit-based insurance scores
As of July 2026, credit-based insurance scores are fully banned in:
- California
- Hawaii
- Massachusetts
If you live in one of these states, your credit score won’t directly affect how much you pay for car insurance. In other states, like Michigan and Maryland, some companies can use your score to calculate premiums, but they can’t use it to determine your eligibility or refuse you a policy.
How to improve your credit (and get better auto insurance rates)
It’s possible to improve your credit and qualify for better insurance rates, though it’ll take some time. Here are some strategies that could help:
- Check your credit report for errors. Mistakes happen more often than you’d think. If something looks off, dispute it with the appropriate credit bureau to possibly give your score a quick boost.
- Pay your bills on time. Payment history accounts for 35% of your credit score. Even one missed payment can have an impact, so consistency matters here.
- Work on paying down existing debt. Lowering your balances — especially on credit cards — can help improve your score and make you look less risky to insurers.
- Avoid opening too many new accounts at once. Each application you submit can add a hard inquiry to your report, which might temporarily lower your score.
- Give it time. Credit doesn’t improve overnight. But small, consistent changes can add up. Even moving up one credit tier could cut your car insurance rates by quite a bit.
Check out: Car insurance discounts that help you save on your auto policy
Credit score affects car insurance rates FAQs
Most do in states where it’s allowed. FICO estimates that about 95% of auto insurers use credit-based insurance scores in some way. That said, how much weight a company gives it can vary, which is why quotes can differ so much between insurers.
Insurance companies use your credit as a way to estimate risk. Data shows a correlation between lower credit scores and a higher likelihood of filing claims, which insurers factor into pricing. Your credit isn’t the only thing that insurers use to determine your rates, but it can certainly affect your premiums.
There isn’t a consistent list, and it often depends on your state. Most major insurers use credit where it’s allowed, though some might weigh it less heavily. Your best bet is to compare quotes from multiple insurers — that’s how you’ll see which company is pricing your credit most favorably.
There isn’t one. You can get car insurance with almost any credit score. However, the difference between excellent and very poor credit can be thousands per year, so having a good score is important if you live in a state where credit-based scores are allowed.
Yes, and the impact can be huge. Drivers with very poor credit can pay $6,254 per year on average, compared to $1,673 for those with excellent credit — even with the same driving record.
Generally no. When you ask for insurance quotes, companies will typically use a soft credit check, which doesn’t affect your score. You can shop around as much as you want without any downside to your credit.
