Question

Does credit score affect car insurance?

Many auto insurance companies utilize a credit-based auto insurance score to determine whether to accept you as a policyholder and the rate you'll pay if they do.

According to the Insurance Information Institute (III), credit-based insurance scores do not take into account your job, income history, gender, or any other personal information. Instead, insurance companies analyze your payment credit history and total debt to determine your risk level. Car insurance companies use them to evaluate the possibility of a future insurance claim. 

Most insurance companies in the United States use credit-based insurance scores, as well as your driving history, claims history, and a variety of other variables to determine eligibility for payment plans and insurance premiums. California, Hawaii, and Massachusetts are the only states where this practice is banned. 

So, if you’ve secured a good credit-based insurance score, a clean driving record, and no claims on your record, you don’t have to worry much, because everything will be fine then. This score is just one of several factors considered when calculating your premium.  

If you have a good credit score, you are most likely to have a high credit-based insurance score as well. If your credit score is poor, taking steps to increase it will almost certainly raise your credit-based insurance score.