How credit affects auto insurance: Rates could increase up to 72%

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    Before offering you a policy, insurance providers analyze your risk profile by looking at things like your driving history, as well as personal details, such as age or marital status. This evaluation is used in determining your premium. 

    But there’s another somewhat surprising factor that affects your premiums in all but three states: your credit score. Unless you live in California, Massachusetts or Hawaii, expect your credit score to affect how much you pay to insure your car, at least to some degree. 

    You may already be familiar with your credit score as determined by the three major credit bureaus, TransUnion, Experian and Equifax, it’s important to know that insurers assign you an insurance credit score that varies from your traditional credit score. While your credit score plays a role in that insurance score, additional factors are also involved.

    It’s important to understand why credit affects car insurance. Carriers’ proprietary credit-based insurance score provides a way to check two things: your likelihood of making insurance payments on time and your likelihood of filing a claim.  

    While insurance carriers use a more complex algorithm to calculate premiums based on your insurance credit score, for the sake of this study, Coverage simplified the ratings by classifying insurance scores into three general categories: “good,” “average” and “poor” credit. This is to give you a general idea of premium impact by credit tier. 

    Can credit scores be evaluated for auto insurance rates?

    Short answer: yes, in most states. California, Massachusetts and Hawaii are the exceptions here.

    Michigan is a bit of a gray area, too. In Michigan, you might be mostly off the hook. Insurers can’t use your credit score, but they can look at your credit information. That means a low score won’t necessarily increase your rates, but a history of missed payments might make an insurance provider wary, and could ultimately affect your rates. 

    Let’s look closer at why credit affects car insurance rates. Studies, including a Congress report by the Federal Trade Commission, have shown that a lower score means you’re a higher risk for your insurer. A poor score directly correlates to an increased risk of filing a claim. 

    The Insurance Information Institute (III) adds to this;

    “Actuarial studies show that how a person manages his or her financial affairs is a good predictor of insurance claims. Statistically, people with a low insurance score are more likely to file a claim.”

    When insurers underwrite your policy, factors like your driving history, your car’s value, where you park it and more are used to determine how much to charge you. Because poor credit can be a risk indicator, this is taken into consideration as well (in the 47 states where allowed). 

    However, your credit score and the credit-based insurance score aren’t necessarily one and the same. 

    How do insurers and credit agencies evaluate scores differently?

    Credit scores and your insurance-based credit scores are not a 1:1 correlation. Credit agencies like Fico, for example, use specific factors of varied importance to determine your credit score, while insurers weigh those factors differently to determine your insurance credit score tier.

    Specifically, III explains that with your credit information,

    “Insurers calculate the insurance score by assigning differing weights to the favorable or unfavorable information in the credit report. Information such as income, ethnic group, age, gender, disability, religion, address, marital status and nationality are not considered when calculating an insurance score.” 

    Essentially, insurers are generally looking at the same things as credit agencies, but are valuing factors differently. Each insurer has a proprietary algorithm used to calculate your unique credit-based insurance score.

    Because of this, your insurance credit score may or may not line up with your credit score from TransUnion, Equifax or Experian. Rather, it falls into tiers reflective of overall lower, average or higher credit scores based on all factors involved.  

    Will I get a credit check when I obtain an insurance quote? 

    If you know that too many hard credit inquiries can lower your credit score, you might worry about requesting a quote for auto insurance. Don’t panic. Calculating your insurance credit score won’t negatively affect your credit rating. 

    Does credit score affect auto insurance rates?

    In most states, the credit tier your provider assigns you has a noticeable impact on your rates. The chart below indicates the overall impact to rates for full and minimum coverage based on credit as a factor.

    National premium averages based on insurance score

    Credit tierFull coverageMinimum coverage
    Good credit$1,555$545
    Average credit$2,076$700
    Poor credit$2,424$1,008

    Quadrant Information Services, 2020

    The data is clear; credit can impact rates significantly. Compared to average credit, having good credit could help you save a whopping $521 a year for full coverage (that’s a savings of 25%). Having poor credit increases yearly rates by an average of 17% — nearly $350. Compared to rates for those with average credit, this is significant. 


    Having good credit could help you save a whopping 25% per year, or

    With good credit, minimal coverage rates cost $155 a year (or about 22%) less. With poor credit, you’ll pay an extra $308 a year (or 44%) — which is more than double the impact poor credit has on full coverage rates. This is likely because having only minimum coverage is already an indication that you are willing to take higher risks with lesser coverage. Compound that with the higher risk insurers perceive from a poor credit history, and minimum coverage rates see significantly higher rates for those in this credit tier. 

    Compared to the national average cost of car insurance ($1,555), having poor credit can increase rates by more than 55%. 


    Having poor credit can increase rates by more than 

    What causes good credit scores?

    Improving your credit score has clear advantages, so it’s important to know what contributes to “good” credit in the eyes of insurers (and credit agencies).

    To reach a higher credit status, the most important thing you can do is consistently make your payments on time. This includes credit card, mortgage and auto loan payments. 

    In addition, make sure you’re not using too much of your available credit — try to keep your balances below 30% of your credit card’s max. 

    You also want to keep any credit lines open, because the age of your credit matters. Avoid opening too many new lines of credit, but if possible, keep your credit sources mixed. Credit agencies like when you have a blend of credit types, such as student loans, credit cards and a mortgage. 

    Because credit score can have a significant impact on car insurance rates, you should see your premiums go down as your credit score improves. 

    What causes poor credit scores?

    Conversely, you can find yourself saddled with a lower credit score if you miss payments, use too much of your available credit, have a shorter credit history, open up too many new lines of credit too quickly or if you don’t have a good credit mix. 

    Making payments and watching your credit limits are things you can do now. Other credit factors, like the age of your credit, are beyond your influence and take time to grow and improve. If your poor credit status is a result of having a new credit history overall, patience and consistency will lead to improvement over time.  

    Does credit affect car insurance rates more in certain states?

    States absolutely have an impact on how much credit weighs into insurance rates. The positive and negative impacts of rates are not always equal in all states either. In Florida, for example, the average driver will save nearly $500 a year for full coverage if they have good credit, but will only pay a measly $35 more a year if they have poor credit. 

    Since California, Massachusetts and Hawaii don’t allow credit score insurance rates adjustments, you won’t see any change to full coverage rates in those states in the table below.

    Premium impact by state

    StateGood creditAverage creditPoor credit
    District of Columbia$1,675$2,198$2,854
    New Hampshire$1,137$1,665$1,838
    New Jersey$1,763$2,576$2,680
    New Mexico$1,374$1,760$2,113
    New York$2,498$2,927$3,392
    North Carolina$1,378$1,428$1,607
    North Dakota$1,211$1,448$1,914
    Rhode Island$2,066$2,504$2,988
    South Carolina$1,568$1,653$2,814
    South Dakota$1,597$1,853$2,832
    West Virginia$1,631$1,834$2,285

    Quadrant Information Services, 2020

    Top 3 states in which rates increase the most with poor credit

    If you live in Maine, South Carolina or Vermont, a poor credit rating will have a substantial impact on your auto insurance rates.  For comparison, the average percentage increase for full coverage rates in these states has been provided below — adjusted for rounding.

    • Maine: $658 = 72% increase
    • South Carolina: $1,161 = 70% increase
    • Vermont: $637 = 53% increase

    In these states, drivers with good credit will see minimal savings, but poor credit means paying significantly more. In South Carolina, in particular, bad credit can add more than a thousand dollars to your premium. This could be because these three states are strong advocates for the use of credit score in determining insurance rates.

    Top 3 states in which full coverage rates increase the least with poor credit

    On the other hand, in other states, you can save quite a bit (roughly $300-$500 a year) with good credit, but rates are hardly affected with poor credit. The following states reflect the least impact to rates for drivers with poor credit: 

    • Florida: $35 = 1% increase
    • Arkansas: $36 = 1.7% increase
    • Nevada: $48 = 2% increase

    While these states permit evaluation of credit when determining auto insurance rates, the data indicates that poor credit as a risk factor will only have a minor impact on rates. 

    California, Hawaii and Massachusetts are not listed here because the 0% change in rates in these states is reflective of regulation prohibiting credit-based insurance scores. 

    Top states in which full coverage rates decrease with good credit

    Let’s look at which states offer lower rates for drivers who fall into the good credit tier. The following states saw the most significant decrease compared to average credit rates in the same states: 

    States that decrease the most:

    • Oregon: $599 = 31.9% decrease
    • New Hampshire: $528 = 31.7% decrease
    • New Jersey: $813 = 31.6% decrease

    While this is great for drivers in Oregon, New Hampshire and New Jersey, your good credit won’t score you dramatic savings in every state. Here are the states where your solid insurance score has a relatively small impact. 

    States that decrease the least:

    • Missouri: $115 = 6% decrease
    • South Carolina: $85 = 5.1% decrease
    • North Carolina: $50 = 3.5% decrease

    How other factors can affect your auto insurance rates

    Now that you have a solid handle on how credit can potentially impact insurance rates, let’s look at other aspects that affect your rates. Improving your credit score takes time, but some of the factors we’ll explore below (namely, discounts) can help you see reduced premiums in the immediate term, near future and long-run. 


    For parents, adding a teen driver can seriously increase insurance rates. On their own policy, 18-year-olds pay even more, at an average of $5,335 a year. In both cases, insurers view inexperience behind the wheel as a major risk factor. Thankfully, driving experience resolves this risk. By the time you reach 25, your average coverage costs drop to $2,036. By your 30’s, the national average drops further to $1,555 a year. 


    As soundly demonstrated in the table above, drivers pay more for coverage in certain states — not solely on the basis of credit, but for geographical and population risk factors as well. If you’re considering a move, it might be a good idea to compare rates in the states where you’re thinking about relocating. We broke down state-by-state rates for you to provide additional comparison guidance regarding this factor.

    Driving history

    A history of accidents or risky driving decisions like speeding is a big red flag when it comes to insurance. Our auto insurance cost guide gives you an idea of how much more you can expect to pay after a speeding ticket or accident. 

    If your driving history is less than stellar, know that you have options. Ask your insurer if taking a defensive driving or driver safety training course will help lower your premiums. You may also opt for a telematics device offered by many providers, which tracks your current driving, to prove you’re a safer driver now.  


    Although in your 30’s and later, gender is less of a weighing factor, men are statistically considered riskier drivers. This is especially true if you’re a younger male. To get a better idea of how much you’ll pay based on your gender identity, check out our gender-based insurance rate page. 


    Discounts are by far the most effective way to sway the balance of other factors in determining your rate. Here are a few discounts you can ask your insurer about to potentially reduce your premiums. 

    • Safe driving: If you haven’t had a ticket or an accident in years, ask your insurance provider if it offers a safe driver discount. 
    • Low mileage: The less you drive, the less likely you are to get into an accident. That’s why insurers offer rate decreases of as much as 27% for low-mileage drivers. If you qualify for this discount, you may see significant savings. 
    • Bundling: Grouping your auto policy with your home or renter’s insurance under the same insurer is one of the more common discount opportunities available from providers. 
    • Auto-pay, paid-in-full: Set up your monthly or annual premiums to automatically withdraw from your bank account for additional savings. The assurance that insurers have that you will pay what you owe incentivizes many to offer you a discount for this payment option. Similarly, paying your yearly premium in full can help you secure a lower rate with many insurance providers. 
    • Safety features: Safety features like anti-lock brakes and anti-theft features like a GPS system can reduce damages in the event of an incident, thereby potentially lowering claim costs. This protects insurers, so you may be offered a discount for having these features. 
    • Good student: If you’re a student, good grades show insurers you’re responsible. Ask about a good student discount and you might be able to save as much as $800 a year
    • Group memberships: Some insurers offer discounts to members of certain groups, like the AARP and college alumni associations. 
    • Defensive driving course: Safe driving reduces your risk on the road, which reduces your insurer’s risk in covering you. Ask your insurer if taking a safe driving course could help you lower your premiums. 

    The takeaway

    • Excluding California, Hawaii and Massachusetts, all states look at credit factors when determining your auto insurance rates. 
    • A statistical correlation exists between a low insurance score and an increased risk of filing a claim.
    • The credit history and car insurance relationship varies from state-to-state.
    • If you have poor credit, there are other factors that can help you pay lower auto insurance rates.

    The data reveals significant impacts to the credit score and car insurance connection in the vast majority of states. In some, a good credit score doesn’t matter much, while a poor one will usually cost you significantly more. In others, the opposite is the case.

    In most states, it makes sense to check your credit report and work towards better credit as it will likely have a direct impact on your rates.  


    Each insurance provider has a proprietary algorithm for factoring credit into rates. While California, Hawaii and Massachusetts are restricted in using credit as a factor, other states will calculate an insurance credit score unique to each person. 

    This score and other factors contribute to a potential policyholder’s designated “tier,” specific to that provider. Because these algorithms are proprietary, our data reflects each provider’s rates adjusted for credit with the assumption that actual rates will likely vary from these estimates. 

    The rates provided above should be used for the sake of comparison only. 

    Coverage utilizes Quadrant Information Services to analyze quoted rates from thousands of zip codes across all 50 states and D.C., using the top carriers by premiums written by state. Quoted rates are based around the profile of a 30-year-old male and female with clean driving records and the following full coverage details:

    • $100k bodily injury liability per person
    • $300k bodily injury liability coverage per crash
    • $100k property damage liability coverage per crash
    • $500 collision coverage deductible
    • $500 comprehensive coverage deductible

    To look at premium differences by credit tiers, the tier was adjusted accordingly. Minimum coverages were applied to match state requirements. The drivers used a new, financed 2018 Toyota Camry, commuting 5 days a week and driving 12,000 miles per year.

    Kacie Goff

    Kacie Goff is an insurance writer for She loves taking complex concepts and distilling them down to make it easier for people to understand their coverage options. Over the last five years, she’s written about personal and commercial coverage for Bankrate, Freshome, The Simple Dollar, local insurance providers and more.

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