What is an insurance score?

The cost of car and home insurance depends on a wide range of personal factors. Some, like the car you drive, the value of your home or your safety record on the road, are fairly intuitive. But others can be harder to understand — like the role that insurance scores play in setting auto insurance rates. These credit-based scores can have an outsized impact on what you pay for insurance, but they’re not often well understood. We break it down for you so you can see how it might impact what you pay for insurance.  

What is an insurance score?

An insurance score is a credit-based metric that insurance companies use as part of their risk calculations when issuing quotes for insurance. These scores are confidential and based on proprietary scoring models that may vary from company to company, but they’re based on the same credit information that goes into your FICO credit score. 

Essentially, your insurance score is a credit score for insurance. There are just a few key differences between your regular credit score and your insurance score: 

• Insurance scores are confidential: Unlike your credit score, which you have a right to know and correct if necessary, you can’t learn your insurance score. However, your FICO score may give you a general sense of what range your insurance score falls into, since they’re based on the same credit information.
• Insurance scores may put more emphasis on payment history: While insurance scoring models are secret, research by the Consumer Federation of America (CFA) indicates that insurance scores may put more emphasis on an applicant’s payment history and less on their credit mix compared with standard FICO scores.  

In the case of both auto and home insurance, a poor insurance score typically results in higher rates. Insurance companies view an applicant’s credit history as an indicator of financial responsibility. According to the Insurance Information Institute (Triple-I), actuarial studies indicate that consumers with lower credit scores may be more likely to file claims, thus posing a greater financial risk for insurers. 

However, the use of insurance scores is controversial. Three states — California, Hawaii and Massachusetts — have prohibited the use of insurance scores in pricing car insurance. In addition, California, Massachusetts and Maryland ban insurers from using credit information to set home insurance rates.

Why is an insurance score important?

In many cases, insurance scores play a significant role in determining the cost of both auto and home insurance coverage. That’s because insurance companies view credit as a statistically significant risk factor and may weigh it more heavily than other risk factors, including those that seem more relevant to car or home ownership. 

In the case of auto insurance, your credit score could raise the cost of coverage by as much as 106 percent. For homeowners, the impact of credit is slightly less severe: policyholders with poor credit pay approximately 77 percent more, on average, than homeowners with excellent credit. 

How is an insurance score calculated?

The exact methods that your insurance company uses to calculate your insurance score are proprietary. In addition, practices vary from carrier to carrier, making it impossible to pin down precisely how insurance scores are calculated. 

Here’s what we do know: Insurance companies use the same credit information that goes into your credit score to calculate your insurance score. Your insurer may work with a third-party company that produces insurance scores, such as FICO. According to the National Association of Insurance Commissioners (NAIC), FICO breaks down insurance scores as follows: 

• Payment history: 40 percent of your insurance score
• Outstanding debt: 30 percent of your score
• Length of credit history: 15 percent of your score
• Recent credit applications: 10 percent of your score
• Credit mix: 5 percent of your score

In other words, nonpayment or late payments are most likely to hurt your insurance score, followed by a high amount of debt. 

What is a good insurance score?

Because insurance scores aren’t available to consumers — and scoring systems vary between companies — it’s difficult to determine what counts as a “good” or “bad” insurance score.

A more practical way to evaluate where your credit might place you in your insurer’s risk tiering systems is to look at your credit score. In general, a good credit score is 670 or above, with scores above 800 considered excellent. If your score is in this range, you’re likely receiving lower insurance rates based on your credit. If your credit score is under 580, on the other hand, your credit could be significantly raising the cost of coverage.

How to improve your insurance score

Thankfully, there are many ways to potentially improve your insurance score. For the most part, strategies and techniques for improving credit scores will also increase your credit-based insurance score. The primary approach is to treat your credit and bills with as much financial responsibility as you can.

Here are some strategies that might help improve your credit-based insurance score:

• Pay bills on time: Payment history has the biggest impact on your insurance score, so avoid late payments and missed payments. If you can afford to pay the full amount you owe each month, rather than just the minimum payment, it can also help keep your credit utilization ratio low.
• Keep credit utilization low: Credit utilization refers to the amount of credit available to you that you actually use. A good benchmark figure is to keep this number below 30 percent of all your available credit.
• Pay down debt quickly: If you have credit card debt, a car loan or other outstanding debt, you may want to make it a priority to pay it down as quickly as possible.
• Avoid hard credit checks before shopping for insurance: Recent credit applications can impact your insurance score. If possible, try to time your insurance shopping to avoid having a recent hard credit pull impact your insurance score. 

To see your credit score and track when and how much it is improving, you can go to www.annualcreditreport.com for free copies of your credit reports. When you use this link, you will be given copies of your credit report from each of the three primary credit bureaus. If your credit score is improving, it’s likely your insurance score is as well. 

Frequently asked questions

• Does an insurance score affect all policy types?

  In most states, insurance scores are used to determine your auto and home premiums. However, some states have laws limiting whether credit history can be used to calculate premiums. Hawaii prohibits the use of credit history in auto insurance rating, while Maryland prohibits its use in home insurance rating. California and Massachusetts prohibit the use of credit history in both auto and home insurance ratings.

• What makes your insurance score decrease?

  Anything that affects your credit score will likely affect your insurance score, too. Having outstanding debt, making late payments, using too much credit and having recent hard credit checks can all negatively affect your insurance score.

• How is my insurance score different from my credit score?

  Your insurance score is calculated using many of the same factors as your credit score, but it’s used to determine how likely you are to file a claim rather than how likely you are to default on a loan or other debt. Each uses overlapping variables, but the formula, outcome and purpose are all different. Note that all insurers use proprietary underwriting guidelines, so how they use insurance scores to determine your rate can vary.

• Is my home insurance score the same as my auto insurance score?

  Typically, your insurance score is the same whether the product is home or auto insurance. However, this can vary depending on your insurer’s underwriting process and whether the same company provides your home and auto insurance. It can also depend on what state you reside in and if there are regulations prohibiting credit usage as a rating factor.

Methodology

Bankrate utilizes Quadrant Information Services to analyze January 2025 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. 

Auto

Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

• $100,000 bodily injury liability per person
• $300,000 bodily injury liability per accident
• $50,000 property damage liability per accident
• $100,000 uninsured motorist bodily injury per person
• $300,000 uninsured motorist bodily injury per accident
• $500 collision deductible
• $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2023 Toyota Camry, commute five days a week and drive 12,000 miles annually. 

These are sample rates and should only be used for comparative purposes. 

Credit-based insurance scores: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit or limit the use of credit as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts and Michigan. 

Home

Bankrate utilizes Quadrant Information Services to analyze January 2025 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on married male and female homeowners with a clean claim history, good credit and the following coverage limits:

• Coverage A, Dwelling: $300,000
• Coverage B, Other Structures: $30,000
• Coverage C, Personal Property: $150,000
• Coverage D, Loss of Use: $60,000
• Coverage E, Liability: $500,000
• Coverage F, Medical Payments: $1,000

These are sample rates and should be used for comparative purposes only. Your quotes will differ.

Credit: Rates were calculated based on the following insurance credit tiers assigned to our homeowners: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining home insurance rates: California, Maryland, Massachusetts.