Car insurance rates by credit score

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Your car insurance rates are determined by a diverse mix of factors including your credit history and insurance score. While not the case in every state, insurance underwriters may place you in an insurance credit tier as a factor in determining the premium you’ll pay. Providers also give policy-seekers an insurance score, which may be determined in part by your credit score — although credit score is not the only factor considered. This insurance score helps insurers communicate each policyholder’s insurable risk.

Insurance companies generally view shoppers with higher credit as less likely to make late payments or file a claim. Generally, the higher your credit, the lower your insurance premium. Understanding how insurance companies evaluate your credit score and how you can improve yours to attain more affordable rates may help you feel more confident in your insurance decisions.

What factors impact my car insurance rates?

Auto insurance companies look at a myriad of rating factors to determine your eligibility and premiums. These factors are standard for most companies, but every company may weigh each factor differently. For example, some companies may charge more than others if you have a history of auto claims.

Here are some key rating factors that most insurance companies take into account:

  • Age (excluding HI)
  • Gender (excluding CA, HI, MA, MI, MT, NC and PA)
  • Address
  • Year, make and model of vehicle
  • Vehicle usage and mileage
  • Citation history
  • Accident history
  • Previous insurance information
  • Credit information (excluding CA, HI, MA, MI and WA)

The purpose of an auto insurance policy is to help you handle the financial responsibilities following an accident. Because insurance companies pay for some of the expenses after covered car accidents, rates are largely based on the likelihood that you will file a claim.

Rating factors can help an insurance company determine how statistically likely you are to file a claim. Each insurance company offers a different set of rates and views these rating factors differently. Comparing insurance companies can be a good way to find a policy that works for you.

Does your credit score affect car insurance rates?

While your credit score often impacts your auto insurance rates, there are only certain details taken into consideration. Insurance companies use what is called a credit-based insurance score. An insurance company is not concerned with how much money you make, but with how well you manage your money. No personal information such as age, gender or address is used in credit-based insurance scores. Instead, insurance companies look at the following:

  • 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 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.

Together, these factors help insurance companies assess their insureds’ level of risk. Studies have shown that there is a correlation between credit-based insurance scores and claims filed. Statistically, the lower your credit score, the more likely you are to file an insurance claim. Because of this increased risk, insurance companies tend to charge more if you have a lower credit score.

National average annual full coverage premium by credit rating

Poor Average Good Excellent
$3,873 $1,865 $1,674 $1,487

How credit score impacts insurance premiums by state

Each state has its own laws when it comes to auto insurance, as well as geographic factors like the incidence of accidents in a certain area or the risk of a vehicle being stolen. This is why the average premium for insurance is different from one state to the next.

The table below shows the average full coverage premium in various states and Washington, D.C., sorted by credit tier. You may notice that California, Hawaii, Massachusetts, Michigan and Washington are missing. These states prohibit the use of credit as a car insurance rating factor.

Florida has the highest rates on our list for poor credit, while Maine has the lowest. If you have average credit, Maine’s rates are the cheapest on average, while Louisiana’s rates are the highest.

Annual full coverage premium by state and credit rating

Poor Average Good Excellent
Alabama $3,108 $1,900 $1,623 $1,540
Alaska $2,265 $1,730 $1,559 $1,497
Arizona $2,804 $1,764 $1,547 $1,423
Arkansas $3,461 $2,146 $1,914 $1,660
Colorado $3,321 $2,213 $2,016 $1,679
Connecticut $2,967 $1,794 $1,845 $1,344
Delaware $2,987 $1,954 $1,775 $1,509
Florida $5,817 $3,032 $2,364 $2,161
Georgia $3,143 $2,200 $1,982 $1,859
Idaho $1,748 $1,217 $1,045 $1,019
Illinois $2,622 $1,653 $1,485 $1,243
Indiana $2,621 $1,480 $1,254 $1,099
Iowa $2,365 $1,408 $1,260 $1,087
Kansas $3,165 $1,924 $1,698 $1,521
Kentucky $4,128 $2,533 $2,128 $1,934
Louisiana $4,630 $3,032 $2,724 $2,410
Maine $1,425 $913 $965 $765
Maryland $2,935 $1,958 $1,877 $1,565
Minnesota $3,087 $1,822 $1,643 $1,445
Mississippi $2,685 $1,893 $1,782 $1,552
Missouri $2,829 $1,865 $1,661 $1,463
Montana $2,894 $1,913 $1,737 $1,560
Nebraska $2,862 $1,697 $1,531 $1,293
Nevada $3,275 $2,404 $2,245 $2,044
New Hampshire $2,174 $1,312 $1,275 $945
New Jersey $3,307 $1,979 $1,757 $1,384
New Mexico $2,534 $1,560 $1,419 $1,300
New York $4,876 $2,585 $2,321 $1,935
North Carolina $1,758 $1,451 $1,325 $1,352
North Dakota $2,388 $1,474 $1,264 $1,107
Ohio $2,075 $1,231 $1,034 $960
Oklahoma $3,024 $2,054 $1,873 $1,680
Oregon $2,288 $1,539 $1,346 $1,245
Pennsylvania $2,553 $1,791 $1,476 $1,507
Rhode Island $3,090 $2,132 $2,018 $1,664
South Carolina $2,775 $1,646 $1,512 $1,250
South Dakota $3,139 $1,896 $1,642 $1,422
Tennessee $2,416 $1,531 $1,338 $1,174
Texas $3,053 $2,106 $1,823 $1,663
Utah $2,369 $1,477 $1,306 $1,144
Vermont $1,873 $1,209 $1,207 $982
Virginia $2,300 $1,425 $1,304 $1,083
Washington, D.C. $3,072 $2,062 $1,855 $1,711
West Virginia $2,635 $1,741 $1,499 $1,355
Wisconsin $5,440 $1,345 $1,186 $1,010
Wyoming $2,357 $1,567 $1,495 $1,229

What can I do to improve my credit score?

Your credit score is an important part of your overall financial health. A high credit score can help you be approved for loans, qualify for lower interest rates or get a higher credit limit. If your credit score is not the best, there are ways that you can improve it. Although it may take time, improving your credit score might help you to lower your car insurance premiums.

Pay your bills on time

Insurance companies often look at your payment history. If you have a history of overdue bills, this could be an indication to companies that you do not manage your money well and make you a higher risk. Consistently paying your bills by the due date might help to increase your overall credit score.

Keep hard credit inquiries to a minimum

Whenever you apply for a line of credit, the company considering you as a customer will pull your credit report. Too many 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

Monitoring your credit score can be beneficial in several ways. When you know your score, you can more easily take steps to improve it. Regular reviews of your credit reports can also help you to identify inaccuracies or fraudulent activity. If you see anything suspicious, you can take steps to dispute it.

Frequently asked questions

How can I monitor my credit score?

You can request a free copy of your credit report from each of the major credit bureaus — Experian, TransUnion and Equifax — once every 12 months. There are other apps and services you can use for more frequent monitoring.

How can I improve my credit-based insurance score?

Although credit-based insurance scores are not the same as your credit score, improving your credit score will also likely improve your insurance score. Paying your bills on time and avoiding hard inquiries might improve both your credit score and your credit-based insurance score and possibly lead to lower premiums.

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

No, in general you don’t have to have a good credit score to get insurance. However, in most states, your credit score can be used to help calculate your insurance rates. A poor credit score will likely translate to higher insurance rates, whereas a good or better credit score will likely translate to lower insurance rates.

How do I get the best deal on car insurance?

To get the best deal on car insurance, you may want to compare car insurance quotes from multiple providers to see which company offers you the lowest rate. In addition, you may want to factor in the discounts that apply to you. To keep the lowest rate, aim to keep your driving record clean and avoid frequent claims.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 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 meet each state’s requirements. Our base profile drivers own a 2019 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: 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. The following states do not allow credit to be a factor in determining auto insurance rates: California, Hawaii, Massachusetts, Michigan, Washington.

Written by
Kay Irvin
Personal Finance Writer
Kay has two years of writing for insurance domains such as bankrate.com and mytopinsuranceblogs.com. She has written about auto and life insurance and was a licensed insurance agent for 10 years.
Edited by
Insurance Editor
Reviewed by
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