Car Insurance Rates by Credit Tier
Only a few states limit or prohibit insurers from considering your credit during the underwriting or rating process.
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Your credit score can affect your ability to find affordable car insurance, similar to how it influences the process of taking out a loan. In most states, insurers use a proprietary credit-based insurance score when determining your eligibility for coverage and calculating what you’ll pay for an insurance policy.1
Studies show that — in addition to demonstrating how well you manage your money — credit-based insurance scores can serve as an indicator to an insurer of how likely you are to file a claim.2 Drivers with bad credit scores typically pay higher rates than people with good or excellent credit.
How does credit score affect car insurance quotes?
Generally speaking, drivers with good credit pay less for car insurance than drivers with lower credit scores. In fact, drivers with excellent credit can expect to pay as much as $2,000 less per year on auto insurance premiums than drivers with poor credit.
Your credit history helps determine your credit-based insurance score, a statistical tool auto insurance companies use to predict the chances (and potential cost) of you filing a car insurance claim. In other words, your insurance score predicts potential insurance losses. Your insurance score, therefore, directly affects your insurance pricing.
Cheapest car insurance for drivers with poor credit
Because a poor credit history may indicate a greater likelihood of having an accident or filing a claim, insurers tend to charge higher premiums if you have bad credit and live in a state that allows them to do so.3
On average, drivers with poor credit pay $126 per month for liability-only policies, and $224 per month for full coverage. The following table shows average quotes from some of the cheapest companies for drivers with poor credit.
Cheapest car insurance for drivers with good credit
A good credit score is usually considered to be between 670 and 739. This range is near or slightly higher than the average credit score in the U.S., according to FICO.4 If this applies to you, you’ll typically pay less for car insurance than someone with poor credit but a bit more than if you had excellent credit.
The following table shows average monthly quotes from top insurers for drivers with good credit.
Cheapest car insurance for drivers with excellent credit
You’ll typically pay the lowest rates for car insurance by credit tier if you have excellent credit. However, several different factors affect your insurance premium, so your credit score only plays a partial role. If you have excellent credit but a very poor driving record, you may face higher rates.5
The average cost of car insurance for drivers with excellent credit is $162 per month for full coverage and $91 for liability. The table below shows the average rates top insurers offer to drivers with excellent credit.
How credit score affects car insurance costs by state
Where you live — including your state, city, and ZIP code — can also affect rates due to the area’s risk factors and insurance laws. States that limit or restrict insurers’ use of credit scores include California, Hawaii, Massachusetts, Michigan, Oregon, and Utah.6
The table below shows what drivers in each state pay overall per month for coverage by credit tier.
How to find out what your credit score is
Though insurers typically use credit-based insurance scores, you don’t have access to this information on your own as a consumer. These insurance scores are mostly based on your existing credit reports with the three national consumer credit bureaus (Experian, Equifax, and TransUnion) and LexisNexis, a data and analytics company that records any insurance claims you’ve made in the past seven years.
If you want to, you can ensure that your credit and claims reports are accurate and dispute them if you find an error. You can check your credit reports — and determine your credit score — with the three consumer credit bureaus at AnnualCreditReport.com. And to view your LexisNexis insurance claim report, called a Comprehensive Loss Underwriting Exchange (CLUE) report, you can visit its consumer-facing website.
How to improve your credit score
In general, you can improve your credit-based insurance score by following all the same steps that you would take to improve your credit score. The following tips can help you improve your credit score over time:
Pay off your credit card debt.
Set up auto pay so you don’t miss any credit card payments.
Don’t apply for any new credit cards or loans unless you really need to.
Build your credit by becoming an authorized user on someone else’s account.7
Factors that affect car insurance rates
Your credit history isn’t the only factor that insurers use to set your car insurance rates. Some factors have an even greater effect on your rates than your credit profile.
Auto insurers commonly consider the following personal rating factors to determine risk: