Does Credit Score Affect Car Insurance Rates?

By Marcus Delgado · Reviewed by Marcus Delgado, licensed P&C producer · Last updated: September 2, 2026

TL;DR: Yes, in 47 states, and the credit score car insurance penalty is bigger than most drivers expect. A spotless-record driver with poor credit pays an average of $1,012 a year for minimum coverage, against $470 with excellent credit: a 115% gap. In seven of our ten states, poor credit costs a clean driver more than a DWI costs a good-credit driver. California, Hawaii and Massachusetts ban it outright.

1. Introduction

Quick Answer: This guide prices the credit score car insurance penalty in dollars, state by state, using regulator filings rather than carrier marketing. Every figure below traces to a public source, and the ten states we price are the ones covered across our insurance guides.

Most articles on this question stop at “yes, credit matters.” That answer is true and almost useless. It tells you nothing about size.

Size is the whole story. A rating factor that moves your bill 3% is trivia. One that doubles it belongs at the top of your to-do list.

So this piece prices the gap from filed rate plans, a federal study and state regulators, for a driver who has never had an accident. At DollarVisor the arithmetic is the product, and nobody pays us to move up a list.

Video: How credit scores impact auto insurance rates

2. What Insurers Are Actually Looking At

Quick Answer: Not the FICO score you check on your banking app. Insurers use a separate credit-based insurance score, built from the same credit file but tuned to predict claims instead of missed payments. It sits alongside your record, your car, and your coverage level as one input among many.

The distinction matters because it is the industry’s main defense. Carriers say they price on an insurance score, not on your credit score.

The gap is smaller than the language suggests. Consumer Federation of America compared the model structures and found the components virtually identical: slightly less weight on credit mix, slightly more on payment history.

Texas publishes the plainest description of the inputs:

How many accounts you carry. Loans, cards, mortgages and retail charge accounts all count.
How much you owe. Balances relative to what you have available.
Your history of past-due payments. The single heaviest input in both model families.
The age of your oldest and newest accounts. A thin file reads as an unknown, not as a clean one.
Recent inquiries. How often your credit history has been pulled lately.

The Texas Department of Insurance also sets a limit that applies in most states: credit cannot be the only reason a company charges you more, declines to sell you a policy, or refuses to renew.

Adoption is close to universal where it is legal. FICO estimates that about 95% of auto insurers use these scores in states that allow them, per the National Association of Insurance Commissioners.

Key takeaway: An insurance score is not your credit score, but it is built from the same file and driven by the same payment history. If your credit report has a problem, assume your car insurance quote has one too.

3. What Poor Credit Costs a Safe Driver in Your State

Quick Answer: Between 75% and 263% more, depending where you live. Michigan is worst of the ten states we price: $2,667 a year against $734 for the same clean-record driver with excellent credit. The credit score car insurance penalty is a state-level number, which is why our car insurance guides price it per state.

The figures below isolate the credit effect by holding everything else constant. Same 35-year-old driver, same 2011 Honda Civic, same 12-mile commute, no accidents, no violations, no lapse in coverage, minimum limits in each state.

Annual Minimum-Limits Premium for a Clean Driver, by Credit Tier

Average annual minimum-limits auto insurance premiums for a safe driver in ten states, split by excellent, fair and poor credit, with the poor-versus-excellent increase.
State	Excellent credit	Fair credit	Poor credit	Poor vs excellent
Michigan	$734	$1,439	$2,667	+263%
New York	$730	$1,148	$2,097	+187%
Florida	$822	$1,346	$2,000	+143%
Texas	$399	$641	$904	+127%
Illinois	$424	$607	$915	+116%
Pennsylvania	$377	$550	$805	+114%
Ohio	$310	$462	$635	+105%
Georgia	$535	$789	$1,047	+96%
North Carolina	$398	$525	$698	+75%
California	$590	$590	$590	Banned
National average	$470	$701	$1,012	+115%

Source: Consumer Federation of America, The One Hundred Percent Penalty, July 2023, from ten large insurers’ filed rate plans. National average excludes the three ban states.

Two things stand out. Michigan bans the use of a “credit score” in its insurance code, yet still carries the steepest penalty in the country, because the law left credit-based insurance scores available. A ban on the wrong words changes nothing.

The second is California. Same driver, same car, one price. That is what the rate looks like when the factor is simply not allowed.

Key takeaway: Poor credit adds between $300 and $1,933 a year to a clean driver’s minimum-limits premium across these ten states. Nothing else you can control moves the bill that far.

4. The Fair-Credit Penalty Nobody Warns You About

Quick Answer: You do not need bad credit to be charged more. Merely fair credit costs a clean driver 32% to 96% extra across our ten states, or $231 a year at the national average. This is one of the quiet reasons your car insurance feels too high when nothing about your driving has changed.

The public conversation treats this as a bad-credit problem. The rate plans disagree. The penalty starts as soon as you leave the top tier, and by the industry’s own definitions the top tier is narrow.

CFA puts excellent at roughly 823 and above on a 300–850 scale, fair at about 710–740, and poor at about 524–577. A 730 is respectable at a bank. In a rate filing it is a surcharge.

What Fair Credit Alone Adds Per Year

Annual dollars added to a clean driver’s minimum-limits premium by fair credit rather than excellent credit, in ten states, shown as bars.
State	Added by fair credit	Increase
Michigan	$705	+96%
Florida	$524	+64%
New York	$418	+57%
Georgia	$254	+47%
Texas	$242	+61%
Illinois	$183	+43%
Pennsylvania	$173	+46%
Ohio	$152	+49%
North Carolina	$127	+32%
California	$0: factor not permitted	None
National average	$231	+49%

Calculated by DollarVisor from Consumer Federation of America, The One Hundred Percent Penalty, July 2023. Bars are scaled to the largest dollar gap.

The dollar ranking and the percentage ranking disagree. Texas adds only $242, but that is a 61% jump; Georgia adds $254 for a 47% jump. In a cheap state, the percentage tells you how hard the factor is being pushed.

Key takeaway: There is no safe middle. Fair credit already costs a clean driver roughly half again their premium, so waiting until your score is “bad” before acting means paying the surcharge for years first.

5. Credit or Driving Record: Which One Costs You More?

Quick Answer: In seven of our ten states, credit costs more. A clean driver with poor credit pays more for full coverage than a driver with a drunk-driving conviction and excellent credit. That inverts how most people assume rating works, much as marital status quietly outranks factors drivers expect to matter.

This is the comparison that changes how the factor feels. One driver has never had so much as a fender bender. The other has a DWI on record. Below is what each pays.

Clean Record With Poor Credit vs DWI With Excellent Credit

Full-coverage annual premiums in ten states comparing a driver with a DWI and excellent credit against a driver with a clean record and poor credit.
State	DWI, excellent credit	Clean record, poor credit	Who pays more
Florida	$2,274	$3,826	Poor credit, by $1,552
Texas	$2,435	$3,426	Poor credit, by $991
Illinois	$1,677	$2,539	Poor credit, by $862
New York	$2,573	$3,162	Poor credit, by $589
Ohio	$1,097	$1,521	Poor credit, by $424
Pennsylvania	$1,893	$2,258	Poor credit, by $365
Georgia	$2,133	$2,415	Poor credit, by $282
Michigan	$5,744	$5,725	Effectively level, $19 apart
North Carolina	$4,015	$1,221	The DWI, by $2,794
California	$4,746	$1,747	The DWI, by $2,999

Full-coverage premiums compiled by Consumer Federation of America, The One Hundred Percent Penalty, July 2023, using Consumer Reports rating data.

North Carolina and California are exceptions by law, not by accident. California bans the factor; North Carolina limits how hard insurers may lean on it, so the driving record does the work.

Michigan is the strangest line. A DWI and a poor credit file price within $19 of each other: two very different facts, treated as the same risk.

Key takeaway: In most states the credit file outweighs the driving record. If you are choosing where to spend effort, fixing a credit report error usually beats another year of flawless driving.

6. Where the Rules Have Moved Since the 1990s

Quick Answer: Slowly, and mostly toward disclosure rather than prohibition. Three states ban the factor in auto pricing outright, one banned it temporarily, and the rest have settled on notice-and-exception rules. Credit score car insurance policy has been contested for three decades, and the direction is still unsettled, which is why we date every figure on our insurance pages.

Where your state sits on this timeline tells you which lever you have. In a ban state, none. Everywhere else, the lever is real.

Three Decades of Credit-in-Rating Policy

Timeline of major federal and state actions on the use of credit information in auto insurance rating, from the early 1990s to 2026.
When	What happened	What it changed
Early 1990s	FICO introduces credit-based insurance scores	Credit enters personal-lines rating for the first time
July 2007	FTC reports to Congress on the scores	Confirms they predict claims, and that Black and Hispanic drivers score lower on average
2019–2020	Michigan reform bars use of a “credit score”	Very little: credit-based insurance scores stayed legal
March 2021	Washington adopts an emergency three-year ban	First modern attempt to remove the factor mid-market
July 2023	CFA measures the penalty from filed rate plans	Puts a number on it: 115% nationally for safe drivers
2025	Washington orders a study of rating factors	Shifts the argument from banning to measuring alternatives
March 2026	NAIC restates the state-by-state position	Most states limit and disclose rather than prohibit

Compiled by DollarVisor from the Federal Trade Commission, the Washington Office of the Insurance Commissioner, Washington Senate Bill 5589, CFA and the NAIC.

Only California, Hawaii and Massachusetts prohibit credit information in auto pricing, per CFA; Nevada added a temporary pandemic-era restriction. Everywhere else the protections are procedural: credit cannot be the sole reason for a decision, and you must be told when it played a part.

Key takeaway: Do not wait for your state to ban the factor. Thirty years of policy history says the likely outcome is more disclosure, not a lower bill.

7. The Life-Event Exception Almost Nobody Claims

Quick Answer: Many states require insurers to set aside credit damage caused by a defined life event. In Texas a divorce, job loss, identity theft, or the death of a spouse, child or parent all qualify. You must ask in writing, which is why it is worth more than a deductible change and gets used far less.

This is the least-known consumer protection in the credit score car insurance system, and it is written into the rules rather than left to a carrier’s goodwill.

Texas spells it out. Once you send a written request with documentation, the insurer must either ignore the affected credit information or assign a neutral score.

Write to the insurer, not the agent. The request has to be in writing and go to the company.
Name the event and attach proof. A decree, a termination letter, a police report, a death certificate.
Ask which remedy they applied. Excluding the damaged entries and assigning a neutral score are not the same thing, and one may help you more.
Escalate to your state department if refused. Texas takes complaints when a company will not make a reasonable exception.

Two limits: companies need not consider repeated events, and rules differ by state: check your own department before assuming the Texas version applies.

Key takeaway: If a specific event wrecked your credit, you may be entitled to have it set aside for rating. Nobody will offer this. You have to ask, in writing, with proof.

8. What to Do If Credit Is Driving Your Rate

Quick Answer: Fix the report first, then re-shop, then look at behavior-based pricing. A telematics program is the one lever that prices you on driving rather than on credit, which makes it worth more to a poor-credit driver than to anyone else.

Work in this order, because the cheapest steps are also the fastest:

Pull your reports and dispute errors. Start at the CFPB’s credit reports tool. An error you fix once keeps paying every renewal.
Claim a life-event exception if one applies. Section 7 has the steps.
Re-quote across at least five carriers. Insurers weight credit very differently, so the spread between them is often larger than the spread between your credit tiers.
Stack the discounts credit cannot touch. Our list of current car insurance discounts covers the ones tied to the car and the policy rather than the file.
Re-shop again once your score improves. Carriers usually re-pull only at renewal, so the gain does not arrive by itself.

One warning: do not close old accounts to tidy your file. Account age is an input, and shortening it pushes the score the wrong way.

Key takeaway: Disputing an error and re-shopping are free and work within weeks. Rebuilding a score works too, but on a timescale of years, so do both, in that order.

9. Conclusion

Quick Answer: Credit affects car insurance rates more than most drivers believe and, in seven of our ten states, more than a drunk-driving conviction does. Treat your credit report as a rating document and check it before your next renewal, alongside the other levers in our guide to lowering your premium.

The honest credit score car insurance summary is uncomfortable. A factor with nothing to do with how you drive is, in most states, the largest thing standing between a safe driver and a fair price.

That is not cause for despair. A rating factor this powerful cuts both ways once it moves in your favor.

10. Frequently Asked Questions

1. Which states ban credit score car insurance pricing?

California, Hawaii and Massachusetts prohibit credit information in auto pricing, per CFA, and Nevada added a temporary pandemic-era restriction. Michigan bars use of a “credit score” but still allows credit-based insurance scores, which is why it has the steepest penalty we measured.

2. Is an insurance score the same as my credit score?

No, but they are close relatives. Both are built from your credit file. The insurance version is tuned to predict claims rather than repayment, with slightly more weight on payment history and slightly less on credit mix. Improving one generally improves the other.

3. Can an insurer refuse to cover me because of bad credit alone?

Not in states like Texas, where credit cannot be the sole reason to decline, cancel, non-renew or surcharge a policy. Most states have a similar rule and require the company to tell you when credit contributed.

4. How much does poor credit add to a car insurance premium?

An average of 115% nationally for a driver with a clean record, or $1,012 a year against $470 on minimum coverage. Across our ten states the range runs from 75% in North Carolina to 263% in Michigan.

5. How fast will a better score lower my rate?

Usually at your next renewal, not before. Most carriers re-pull credit at renewal rather than continuously, so the saving arrives on that cycle. Re-quoting elsewhere is faster.

6. Does checking my own credit hurt my insurance score?

No. Pulling your own report is a soft inquiry and is not treated as a credit-seeking event. Only hard inquiries from applying for new credit register in the score models insurers use.

This article is for general information and is not financial or insurance advice. Figures come from filed rate plans and public reports, not from live quotes. See our full disclaimer.