Does auto insurance affect your credit score?

Auto insurance won't affect your credit score, but it does work the other way around. If you have poor credit, you might pay double for auto insurance than what you would with good credit.

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Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Cynthia Lanctot is an insurance professional with ten years of industry experience. Cynthia is licensed in several states, and holds an associate in claims law, as well as a bachelor’s degree in English. Cynthia’s experience includes the New England and Northeast states. She currently works as a liability claims professional and an occasional online contributor.

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Reviewed by Cynthia Lanctot
Licensed Agent

UPDATED: Aug 12, 2020

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A Concise Overview

  • If you’re behind on your auto insurance payments, it probably won’t get reported to your credit
  • However, your credit is a huge factor that determines how much your insurance rates will be.
  • When you get an insurance quote, insurers will make a soft hit on your credit which won’t hurt your score.

Does auto insurance affect your credit score? Does unpaid car insurance go on your credit? Does just looking for auto insurance affect your credit score?

There’s a definite relationship between credit score and auto insurance rates, but it really just works one way. While your credit won’t likely be affected by late payments or a canceled policy, your existing credit history will impact how much you’ll pay for auto insurance.

If you’re looking for how to buy auto insurance no matter what your credit score, we can help you out. Enter your ZIP code into our FREE tool above to get quotes from multiple insurers.

Does auto insurance affect your credit score?

Can car insurance affect your credit score? No, it’s highly unlikely that your payment history for auto insurance will be reported to the credit agencies. Your driving history and claims history are important, but they won’t get reported to your credit.

If you end up with a bad insurance record, you may need high-risk auto insurance, but you won’t have to worry about lowering your credit score. However, it absolutely works the other way around.

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How does your credit score affect the price you pay for insurance?

Your credit history will affect how much you pay for your auto insurance in most cases. In the table below, you can see how rates change whether you have poor, fair, or good credit. Rates can skyrocket if your score isn’t great.

Average Annual Auto Insurance Rates by Credit Score for Major Insurers
CompaniesAverage Annual Rates with Good CreditAverage Annual Rates with Fair CreditAverage Annual Rates with Poor Credit
USAA$1,821.20$2,219.83$3,690.73
State Farm$2,174.26$2,853.00$4,951.20
Geico$2,434.82$2,986.79$4,259.50
American Family$2,691.74$3,169.53$4,467.98
Nationwide$2,925.94$3,254.83$4,083.29
Progressive$3,628.85$3,956.31$4,737.64
Farmers$3,677.12$3,899.41$4,864.14
Allstate$3,859.66$4,581.16$6,490.65
Travelers$4,058.97$4,344.10$5,160.22
Liberty Mutual$4,388.18$5,604.24$8,802.22
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Do all insurance companies use credit scores? Not all insurance companies use credit scores, but the ones that do typically don’t just check your credit score.

What credit score do insurance companies use? The National Association of Insurance Commissioners notes that several companies determine scores that insurance companies can use, such as the FICO score. These scores take into account:

  • 40 percent – your previous payment history
  • 30 percent – how much outstanding debt you currently have
  • 15 percent – your credit history length
  • 10 percent – if you have recently added or applied for new lines of credit
  • 5 percent- a mix of the types of credit you have (mortgage, credit card, auto loans, etc.)

It’s important to note that insurance scores can’t use your personal information to determine your score. This means they can’t use your race, age, gender, religion, marital status, or other personal information in determining this.

That doesn’t mean that auto insurance companies can’t use that data though. Your rates can change based on location, gender, age, and driving record.

This video goes over some of the ways auto insurers determine your rates including your credit scores.

Your credit history is even one of the top factors that determine your auto insurance rates, along with your driving record and age.

Can you get non-credit-based car insurance?

What if your credit isn’t the best. Then what? Does State Farm or Geico use credit scores? How do you know?

No credit check auto insurance is available, but most of the major insurers do check your credit. Every auto insurance company determines its rates a little differently. That’s why it’s so important to shop around. You can save hundreds by switching to a more lenient insurer.

Do car insurance quotes affect your credit score?

Does checking car insurance affect your credit score? Are car insurance credit checks soft or hard?

When you get quotes for auto insurance, insurers will run a credit check. But, it’s a soft hit. That means it won’t report to your credit or affect your score at all.

No matter what your credit score is, it’s important to shop around. Now that you know how car insurance affects your credit score, enter your ZIP code into our FREE tool below to get quotes from multiple insurers.

References:

  1. https://content.naic.org/article/consumer_insight_creditbased_insurance_scores_arent_same_credit_score_understand_how_credit_and_other_factors.htm

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