What Does Your Credit Score Have to Do with Car Insurance?

Most people understand that they need a good credit score to secure a mortgage or get an auto loan with a decent interest rate. But were you aware that your credit score can affect how much you pay for auto insurance? Depending on where you live, credit scores may not be a car insurance rating factoring. Also, if you have good credit, your rates might be even lower in some states.

Below is some information about using credit scores for auto insurance and a few simple ways to boost your score.

How Does Your Credit Score Impact Your Auto Insurance?

Auto insurance companies use a process called underwriting. This process incorporates a series of complex rating factors to calculate your auto insurance rate. These rates reflect the likelihood of you getting into an accident or filing a claim for some other type of loss. Basically, your carrier does their best to determine how risky of a driver you are.

credit scoreDo all states use credit scores in this process? No, they don’t. If you live in California, Hawaii or Massachusetts, your credit score is not used to determine auto insurance rates. However, credit scores are used in varying degrees as a rating factor throughout the rest of the country. It’s also important to remember that factors other than credit scores play a role in determining auto insurance rates. In other words, although credit scores can influence your rate, the degree of the impact can vary.

Your car insurance rates are also influenced by things like your driving record, your zip code, your car model and your mileage. That being said, having a perfect credit score doesn’t necessarily mean your car insurance rates will be low. However, the combination of a good driving record and a good credit score can certainly help you get cheaper rates.

Simple Things to Improve Your Credit Score

In most states, your credit score impacts your auto insurance rate to some degree. Are you planning to shop for auto insurance in the near future? First, take a few simple steps to improve your credit rating and secure lower rates. Pull your free annual credit report to make sure everything is accurate. If there are disparities or unpaid debts, take care of them as soon as possible. Also, pay all of your bills on time and consider using auto-pay for your bills. Avoid certain types of credit, such as department store cards, and don’t apply for new credit too often.

Get A Free Quote & Find Low Rates

Using credit scores as a rating factor for auto insurance isn’t always popular. However, it could help you receive lower rates. Regardless of your credit situation, your best option is to get several free quotes to find the best car insurance rates. Get started now by calling (855) 919-4247 or going online for a free auto insurance quote.


The information in this article is obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. Such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.

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