Which insurance companies don't check credit score?

Car insurance rates are personalized based on a variety of factors that indicate how risky a driver is to insure, including credit. While your credit score may not impact your rate directly, insurance companies may look at your credit history and credit-based insurance score to help determine how likely you are to file claims. While credit is a common and permitted rating factor in most states, not all auto insurance companies will check a driver’s credit when calculating their premium. Bankrate’s insurance editorial team compiled the ones that don’t to help you understand your options.

Why does your credit matter for car insurance?

Drivers with poor credit have been found more statistically likely to file claims and, therefore, are considered higher risk to insure. To compensate for potential claims, insurance companies generally charge drivers with a lower credit standing a higher premium. Ultimately, charging drivers a higher rate for having bad credit is a way for the insurance company to lower its own financial risk.

Because of this, in states where it is allowed, most car insurance companies consider your credit score when they provide a policy quote. During the quoting process, a licensed agent will gather basic information such as your full name, date of birth and physical address. This information is used by insurance companies to access consumer reports used to determine your credit-based insurance score, which is a rating factor used to calculate your rate. Fortunately for drivers, these checks are only soft credit inquiries and do not adversely affect your credit score like a hard credit check would.

What states do not allow credit checks for insurance?

Depending on where you live, insurance companies are not allowed to use your credit score to determine your premium. There are currently four states in which state laws ban insurance companies from factoring credit when determining car insurance rates:

• California
• Hawaii
• Massachusetts
• Michigan

In some other states, like Utah and Oregon, insurance companies cannot legally use your credit score as a basis for canceling an auto insurance policy or refusing to renew an existing policy. However, insurance companies in these states can still use your credit score to determine your premium, which is why having a good credit score may give you an advantage in finding cheaper rates. Unless you live in one of the four states listed above, you can likely expect car insurance companies to look at your credit score when you apply for coverage.

What insurance companies do not check credit scores?

There are a few insurance companies that do not require a soft credit check when calculating your insurance premiums, such as CURE, Dillo and Empower. Additionally, a few states such as the ones listed above do not allow insurance companies to use your credit score when determining your insurance rates. If you live in a state that enables insurance companies to check credit and finding a company that doesn’t not factor in credit is your top concern, here are two kinds of auto insurance that may not require a credit check in order for you to get approved:

Other car insurance options

Usage-based insurance

If you go with a usage-based insurance company, your monthly premium is heavily based on the distance you drive, rather than a fixed annual or semi-annual rate. This is also called pay-per-mile insurance, and it can be a cheaper option for infrequent drivers. Because there is no fixed premium, some usage-based insurance companies, like Root and MetroMile, will not check your credit score. More traditional insurance companies may still consider credit, but low usage of your vehicle could outweigh any potential impacts of low credit. 

Here are some of usage-based insurance options you may consider:

• Root Insurance
• MetroMile
• Milewise® from Allstate
• SmartMiles® from Nationwide

When it comes to usage-based insurance, it may not be ideal for drivers who travel longer distances. Based on the pricing structure, it can actually be more expensive than traditional car insurance if you drive every day, such as on a regular commute to work or school.

Telematics insurance

If you’re concerned about getting costly car insurance quotes because of a poor credit score, another option to consider is telematics-based insurance. Although it would not circumvent a credit check in all scenarios, it may provide you more affordable rates if your driving habits are consistently safe. This type of car insurance uses a telematics device or mobile app to track your driving habits, like average speed and how fast you brake.

Rather than paying a flat monthly rate or a rate based on specific distance traveled, a telematics-based insurance premium is based on how safe (or unsafe) you drive. Even if you have a poor credit score, you could potentially make up for it by demonstrating safe skills behind the wheel.

Here are some of the telematics-based insurance programs:

• Progressive Snapshot
• State Farm Drive Safe and Save
• Farmers Signal
• Geico DriveEasy
• Allstate Drivewise
• Nationwide SmartRide

Frequently asked questions