How can I monitor my credit score?

There are many different potential routes for keeping an eye on your credit score. You can purchase your credit score from each of the major credit bureaus or directly through FICO. However, there are also free resources for credit monitoring. This is an available option from several banks and credit card companies, as well as third-party services. You may want to double-check that a credit monitoring service is reputable before inputting personal information. Learn more: How to check my credit score

Does getting a car insurance quote impact my credit score?

When you seek a quote for car insurance, insurers may review your credit history as part of their assessment process in states where this practice is permitted. However, this should not worry you regarding your credit score. The type of credit check performed by insurance companies is a soft inquiry, which might be noted on your credit report but is unlikely to influence your score. Soft inquiries are different from hard inquiries, which can impact your credit score and are typically associated with applications for new credit.

How can I improve my credit-based insurance score?

It's important to recognize the distinction between your general credit score and your credit-based insurance score, though the two are interconnected. Improving your overall credit score can also have a positive effect on your insurance score. Consistently paying your bills on time is a fundamental step in this direction. Additionally, minimizing hard inquiries on your credit report can be beneficial. These strategies are not only good for your credit health, but might also assist in bettering your insurance score, potentially leading to more favorable insurance premium rates. Consider diversifying your credit by responsibly managing a mix of credit accounts, such as credit cards, loans and mortgages. This can demonstrate to lenders and insurers alike, that you have the ability to handle different types of credit responsibly. Also, keeping your credit card balances low relative to your credit limits can positively affect both your credit and insurance scores, as it reflects good credit utilization habits.

Do you have to have a good credit score to get insurance?

Drivers looking for car insurance with bad credit scores often still have avenues to secure car insurance, though the journey might be slightly more challenging. While some insurers might hesitate to provide coverage to individuals with lower credit scores, viewing them as higher-risk, it's usually possible to find carriers willing to extend insurance. These drivers may face higher premiums as a reflection of the perceived risk. Conducting thorough research and exploring various insurance providers — for instance, insurers that specialize in high-risk consumers — could lead to finding a company that accommodates drivers with diverse credit histories.

What other factors affect my car insurance rates?

Car insurance companies consider more than a dozen rating factors when calculating your premium. Although your credit score can significantly impact your rate, some other rating factors include the make and model of your vehicle, your driving record, claim history and how you use your car. Additionally, most states allow car insurance companies to use your gender, age and ZIP code to generate your premium.

What is a good credit score for insurance?

What constitutes a "good" credit score for insurance purposes can vary by insurer and is often influenced by several factors beyond just the numerical score. Typically, insurers use a version of your credit score, known as a credit-based insurance score, to assess risk and determine premiums. Generally, scores in the higher ranges are viewed more favorably and could lead to more advantageous premium rates. While the exact threshold for a "good" score might differ among companies, FICO defines a good credit score as anywhere from 670 and 739. With above 800 being excellent and below 579 being poor. However, it's important to note that each insurer has its own criteria for evaluating credit scores and their impact on insurance rates.

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Car insurance rates by credit score

Written by

Ashlyn Brooks

Edited by

Lisa McArdle

Reviewed by

Thomas Brock, CFA, CPA

Edited by

Lisa McArdle

Reviewed by

Thomas Brock, CFA, CPA

Updated Nov 01, 2024

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Does your credit tier impact your car insurance premium?

What to know first

On average, drivers with poor credit pay 113 percent more for full coverage car insurance than those with excellent credit.
California, Hawaii, Massachusetts and Michigan prohibit or limit the use of credit as a rating factor in determining auto insurance rates.
Drivers with poor credit in New York pay one of the the highest average rates for full coverage car insurance at $7,702 per year.

In most states, your insurance score can play a role in determining what you will pay for your car insurance premium. Why? Research shows in many cases that individuals with better credit history are less likely to file a claim against their insurance company, and carriers often reward customers who are less likely to file claims with a preferential rate. Drivers with a poorer credit history, meanwhile, may be more likely to file a claim, making them higher risks for the insurers, who compensate by charging more.

National average annual full coverage premium by credit rating

Poor credit	Average credit	Good credit	Excellent credit
$4,801	$2,769	$2,542	$2,200

Why does your credit record affect car insurance rates?

When evaluating your credit history, insurance companies use what is called a credit-based insurance score. All insurers create their own proprietary insurance score, and no two formulas are the same.

While each insurer has its own proprietary underwriting system for calculating an insurance-based credit score, common factors that usually factor into this score include:

Outstanding debt: This is the amount of debt you currently have.
Credit history length: This shows how long you have had an open line of credit.
Credit mix: This reflects different lines of credit, such as auto loans, mortgage loans and credit cards.
Payment history: This shows how well you have managed to pay your debts over time.
Pursuit of new credit: This shows recent attempts to open new lines of credit.

How credit record impacts insurance premiums by state

The impact of a credit record on insurance premiums can differ widely across states, as most jurisdictions permit insurers to factor in credit history when determining rates. This practice, combined with variables such as local traffic conditions, weather patterns, population density and the overall cost of living, contributes to the fluctuating nature of rates from one state to another.

The table below provides a snapshot of how these rates for full coverage policies vary by credit tier across various states, including Washington, D.C. It's noteworthy that states like California, Hawaii, Massachusetts and Michigan have regulations that limit or outright prohibit the use of credit scores in setting average car insurance premiums.

Annual full coverage premium by state and credit rating

	Poor	Average	Good	Excellent
Alabama	$3,841	$2,375	$2,191	$1,927
Alaska	$3,888	$2,519	$2,330	$2,023
Arizona	$5,779	$2,813	$2,556	$2,191
Arkansas	$3,866	$2,377	$2,186	$1,944
California*	$2,700	$2,700	$2,701	$2,700
Colorado	$4,749	$2,846	$2,605	$2,122
Connecticut	$3,946	$2,572	$2,122	$1,610
Delaware	$4,246	$2,847	$2,613	$2,245
Florida	$8,578	$4,443	$3,941	$3,199
Georgia	$4,385	$2,816	$2,609	$2,271
Hawaii*	$1,655	$1,656	$1,655	$1,655
Idaho	$2,081	$1,493	$1,416	$1,280
Illinois	$3,963	$2,480	$2,303	$1,961
Indiana	$3,013	$1,785	$1,630	$1,363
Iowa	$3,316	$1,867	$1,680	$1,418
Kansas	$5,061	$2,873	$2,619	$2,205
Kentucky	$5,061	$2,822	$2,540	$2,139
Louisiana	$7,094	$3,970	$3,609	$3,016
Maine	$2,842	$1,637	$1,497	$1,291
Maryland	$4,524	$2,727	$2,491	$2,150
Massachusetts*	$1,682	$1,682	$1,683	$1,682
Michigan*	$7,015	$3,749	$3,336	$2,684
Minnesota	$4,287	$2,212	$1,982	$1,679
Mississippi	$3,890	$2,267	$2,049	$1,766
Missouri	$5,706	$3,421	$3,164	$2,614
Montana	$3,942	$2,395	$2,235	$1,906
Nebraska	$3,785	$2,183	$1,984	$1,685
Nevada	$5,415	$3,745	$3,535	$3,084
New Hampshire	$3,342	$1,801	$1,625	$1,322
New Jersey	$5,361	$2,970	$2,547	$1,909
New Mexico	$4,218	$2,381	$2,204	$1,866
New York	$8,812	$4,269	$3,833	$3,127
North Carolina	$2,220	$1,774	$1,708	$1,647
North Dakota	$3,301	$1,824	$1,619	$1,324
Ohio	$2,867	$1,639	$1,498	$1,244
Oklahoma	$4,628	$2,782	$2,536	$2,172
Oregon	$3,289	$2,020	$1,846	$1,609
Pennsylvania	$4,172	$2,965	$2,790	$2,443
Rhode Island	$4,691	$3,058	$2,682	$2,341
South Carolina	$3,463	$2,041	$1,872	$1,516
South Dakota	$4,083	$2,160	$1,946	$1,604
Tennessee	$3,462	$2,023	$1,806	$1,498
Texas	$5,010	$2,943	$2,613	$2,291
Utah	$3,326	$2,083	$1,916	$1,636
Vermont	$2,349	$1,457	$1,347	$1,183
Virginia	$3,747	$2,161	$1,960	$1,606
Washington	$1,899	$1,664	$1,613	$1,530
Washington, D.C.	$6,377	$2,822	$2,430	$2,032
West Virginia	$3,602	$2,057	$1,858	$1,549
Wisconsin	$3,091	$1,906	$1,726	$1,451
Wyoming	$2,484	$1,685	$1,582	$1,340

*These states prohibit or limit the use of credit as a rating factor.

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What can I do to improve my credit score?

Enhancing your credit score is a vital aspect of managing your financial health effectively. Achieving a higher credit score could potentially unlock benefits such as loan approvals, more favorable interest rates and increased credit limits. For those whose credit scores are less than ideal, there are strategies that might assist in gradual improvement. The journey to build and boost your credit score can be time-consuming, but it's often worth the effort, especially since it could lead to reduced premiums on your car insurance. Should conventional insurance providers offer rates that don't align with your budget, investigating options from insurers that don't require a credit check might be worthwhile, provided such alternatives exist in your region. The steps outlined below are designed to guide you in enhancing your credit score.

Pay your bills on time

Timely payment of your bills plays a crucial role in shaping your credit-based insurance score. A pattern of late payments or credit delinquencies might signal to insurers a potential risk in financial management, possibly indicating a higher likelihood of claim submissions for minor damages. By making it a habit to settle your bills on or before their due dates, you could positively impact your credit and, consequently, your insurance scores.

Keep hard credit inquiries to a minimum

Credit inquiries come in two forms: hard checks and soft checks. Whenever you apply for a line of credit, the company considering you as a customer will pull your credit report, which constitutes a hard inquiry and does affect your score. When insurance companies review your credit in the quoting process, that is considered a soft inquiry and shouldn’t have an impact on your actual credit tier. Too many hard inquiries can have a negative impact on your score. If you are trying to build your credit, you may want to consider waiting to apply for a loan or line of credit.

Monitor your score regularly

Keeping a close eye on your credit score can be advantageous for multiple reasons. Being aware of your score enables you to take proactive measures toward improvement. Furthermore, routine checks of your credit reports can uncover errors or signs of identity theft early on. Spotting something amiss allows you to challenge and rectify any inaccuracies promptly.

Maintain old lines of credit

Maintaining long-standing credit accounts can be beneficial for your credit score, including the portion that influences your insurance rates. The duration of your credit history can contribute significantly to your score, accounting for 15 to 20 percent. Rather than closing an unused credit card, consider utilizing it sparingly and ensuring payments are made on time. This approach can help in fortifying your credit history and minimizing your credit utilization ratio, which is described below.

Be aware of your credit utilization ratio

In addition to the number of lines of credit you have, your credit utilization ratio will also impact your credit rating. Your credit utilization ratio is a measurement of how much credit you have available compared to how much you use. Although there is no set rule of how much of your credit you should be using, many finance professionals recommend that you utilize no more than 30 percent of your total available credit at any given time. If you are using more than 30 percent of your available credit, paying off some of your debt to bring your credit utilization score down may help improve your credit score and, in turn, your credit-based insurance score.

Frequently asked questions

There are many different potential routes for keeping an eye on your credit score. You can purchase your credit score from each of the major credit bureaus or directly through FICO. However, there are also free resources for credit monitoring. This is an available option from several banks and credit card companies, as well as third-party services. You may want to double-check that a credit monitoring service is reputable before inputting personal information.

Learn more: How to check my credit score
When you seek a quote for car insurance, insurers may review your credit history as part of their assessment process in states where this practice is permitted. However, this should not worry you regarding your credit score. The type of credit check performed by insurance companies is a soft inquiry, which might be noted on your credit report but is unlikely to influence your score. Soft inquiries are different from hard inquiries, which can impact your credit score and are typically associated with applications for new credit.
It's important to recognize the distinction between your general credit score and your credit-based insurance score, though the two are interconnected. Improving your overall credit score can also have a positive effect on your insurance score. Consistently paying your bills on time is a fundamental step in this direction. Additionally, minimizing hard inquiries on your credit report can be beneficial. These strategies are not only good for your credit health, but might also assist in bettering your insurance score, potentially leading to more favorable insurance premium rates.

Consider diversifying your credit by responsibly managing a mix of credit accounts, such as credit cards, loans and mortgages. This can demonstrate to lenders and insurers alike, that you have the ability to handle different types of credit responsibly. Also, keeping your credit card balances low relative to your credit limits can positively affect both your credit and insurance scores, as it reflects good credit utilization habits.
Drivers looking for car insurance with bad credit scores often still have avenues to secure car insurance, though the journey might be slightly more challenging. While some insurers might hesitate to provide coverage to individuals with lower credit scores, viewing them as higher-risk, it's usually possible to find carriers willing to extend insurance. These drivers may face higher premiums as a reflection of the perceived risk. Conducting thorough research and exploring various insurance providers — for instance, insurers that specialize in high-risk consumers — could lead to finding a company that accommodates drivers with diverse credit histories.
Car insurance companies consider more than a dozen rating factors when calculating your premium. Although your credit score can significantly impact your rate, some other rating factors include the make and model of your vehicle, your driving record, claim history and how you use your car. Additionally, most states allow car insurance companies to use your gender, age and ZIP code to generate your premium.
What constitutes a "good" credit score for insurance purposes can vary by insurer and is often influenced by several factors beyond just the numerical score. Typically, insurers use a version of your credit score, known as a credit-based insurance score, to assess risk and determine premiums. Generally, scores in the higher ranges are viewed more favorably and could lead to more advantageous premium rates. While the exact threshold for a "good" score might differ among companies, FICO defines a good credit score as anywhere from 670 and 739. With above 800 being excellent and below 579 being poor. However, it's important to note that each insurer has its own criteria for evaluating credit scores and their impact on insurance rates.

Methodology

Bankrate utilizes Quadrant Information Services to analyze November 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. 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 2022 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.

Written by

Ashlyn Brooks

Writer II, Insurance