Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 23, 2020

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Things to Remember...

  • Forty-six states use your credit score as a factor when calculating your insurance premium
  • Insurance companies use a form of the credit score (known as the “insurance score”) which takes into accounts things like late payments, type of credit, credit card utilization and collections
  • You can improve your credit score by paying your bills on time and utilizing the credit you already have appropriately.

When you think about all of the factors that go into your auto insurance, you usually think about various aspects of the car itself, or perhaps of your type of coverage.

You might not know it, but depending on where you live your credit score might even be one of the things your insurance company uses to determine your rates.

You can find and compare auto insurance quotes from many different insurance companies. Enter your zip code above right now!

States That Use Your Your Credit Score

united-states-of-america-map-1600x1600

Today, there are 46 states in which auto insurance companies can look at your credit score and consider it a factor in your premiums. California, Massachusetts, Hawaii and Maryland forbid this practice, but it’s open everywhere else.

Why would an auto insurance provider want to know your credit score? The auto insurance companies believe that a person who has a lower credit score is less of a risk to the insurance company.

The insurance companies use a form of the credit score (known as the “insurance score”) which takes into accounts things like late payments, type of credit, credit card utilization and collections.

Some states are still struggling with this issue. For example, in Michigan, the Attorney General addressed auto insurance laws and banned the practice of considering credit in determining insurance premium rates.

The Michigan Supreme Court suggested that these scores were part of a reasonable way of classifying risk.

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

Other Factors to Take Into Consideration

Your credit score isn’t the only factor in your auto insurance premium rates. Your age, type of vehicle, where you live all play a part when calculating our monthly premium.

The insurance companies each have their own formulas for how each factor is weighted. Even in states where it’s legal for the company to consider your credit score, not all of them do.

If you’re concerned that your credit score is negatively impacting your auto insurance rates, you have a few options.

You can improve your credit score by paying your bills on time and utilizing the credit you already have appropriately. You can also consider switching to an insurance company that doesn’t use the score as a factor.

You can balance out that higher cost with other choices such as driving a vehicle with advanced safety features and completing a defensive driving course.

When it comes to your auto insurance, your credit score can be a major factor in determining your costs.

Enter your zip code below to start putting your new cheap auto insurance tricks to good use! Compare auto insurance quotes from top companies now!

References:

  1. http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm
  2. https://www.allstate.com/tools-and-resources/car-insurance/factors-affect-your-auto-insurance.aspx
  3. http://www.experian.com/blogs/ask-experian/credit-education/score-basics/improve-credit-score/
  4. https://www.dmv.de.gov/services/driver_services/defensive_driving.shtml