🚘 Does Your Credit Score Affect Car Insurance? (2025 Laws by State)
Overpaying on your car insurance?
You might be surprised to learn your credit score could be a factor. In fact, most U.S. insurers use a version of your credit report to help set your premium. But is that legal everywhere? And how much does it matter?
In this guide, we’ll break down:
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How credit scores impact your car insurance
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Which states allow or ban this practice in 2025
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How to protect your rates—even with bad credit
💡 What Do Insurers Check in Your Credit?
Most insurers don’t look at your full credit report. Instead, they use a special model called a credit-based insurance score, which includes:
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Payment history
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Outstanding debt
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Length of credit history
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Types of credit used
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New credit activity
👉 Note: Insurers don’t see your actual credit score (like FICO), but use similar factors.
📊 Why Credit Score Affects Car Insurance Rates
According to a 2024 study by the Insurance Information Institute (III), drivers with poor credit can pay up to 65% more than those with excellent credit—all other factors being equal.
Why? Insurance companies believe credit behavior correlates with risk. Statistically, people with higher credit scores tend to file fewer or less expensive claims.
🧠 Did You Know? Your credit score may impact your premium more than your driving history in some states.
🗺️ Credit Score and Car Insurance: State Laws in 2025
In 2025, some states restrict or prohibit using credit scores in insurance pricing. Here’s a quick breakdown:
| State | Status |
|---|---|
| California | ❌ Banned |
| Hawaii | ❌ Banned |
| Massachusetts | ❌ Banned |
| Michigan | ✅ Limited Use (age-adjusted only) |
| Oregon | ✅ Limited Use (during renewals only) |
| Washington | ✅ Use paused until 2026 |
| All Others | ✅ Allowed (with disclosures) |
📌 Always check your local Department of Insurance for updates.
📉 How to Lower Car Insurance with Poor Credit
Even if you have a low credit score, you can still find affordable coverage. Try these expert tips:
🔁 1. Shop Around Every 6–12 Months
Insurers rate credit differently. Comparing quotes could save you hundreds.
💼 2. Ask About Discounts
Look for:
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Good driver discounts
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Bundling (home + auto)
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Telematics (usage-based programs)
🧾 3. Improve Your Credit Over Time
Paying off debt, reducing credit card usage, and avoiding late payments can slowly improve your insurance score.
💡 4. Raise Your Deductible
Opting for a higher deductible lowers your monthly premium (but means higher out-of-pocket if you file a claim).
❓ What’s a Good Credit Score for Car Insurance?
| Credit Tier | Insurance Impact |
|---|---|
| Excellent (750+) | Lowest premiums |
| Good (700–749) | Low premiums |
| Fair (650–699) | Moderate to high premiums |
| Poor (below 650) | Highest premiums |
💬 Pro Tip: Some insurers may not penalize you if you’ve had a recent major life event (like a medical emergency or job loss)—ask about exceptions.
📱 Do Telematics Replace Credit Checks?
Telematics programs (like Drivewise by Allstate or Snapshot by Progressive) track your driving habits via a mobile app or device and offer discounts based on how safely you drive. These programs may:
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Reduce reliance on credit scoring
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Offer bigger savings for safe drivers
However, telematics doesn’t completely eliminate credit scoring in most states.
🔐 Privacy and Your Rights
Per the Fair Credit Reporting Act (FCRA):
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You must be notified if your credit impacts your rate
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You have the right to request your insurance score from the insurer
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You can dispute errors on your credit report
Check your credit reports annually via AnnualCreditReport.com (free for all 3 bureaus).
🧭 Conclusion: Know Where You Stand
In 2025, your credit score still plays a major role in how much you pay for car insurance—unless you live in a state where it’s banned.
Before choosing a policy, always compare quotes from multiple insurers, especially if your credit is less than perfect.
✅ Ready to Find a Better Rate?
👉 Compare personalized car insurance quotes now and check your state’s latest credit rules.
📌 Disclosure:
We may earn a commission from links on this page, but our reviews and guides remain unbiased and based on public data.
🔄 Recap:
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Credit scores affect car insurance in most states.
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A low score may increase your premium.
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Some states ban or restrict this practice.
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Shop around, ask for discounts, and consider telematics to reduce costs.
