When applying for a car loan or lease, most people understand that their credit score affects the interest rate they’ll pay. But what many drivers don’t realize is that credit can also influence auto insurance premiums. Depending on where you live and how insurers in your state operate, your credit history could either help you secure lower insurance rates or cost you significantly more each year.
In today’s competitive insurance market, understanding how credit affects your auto insurance can empower you to make smarter financial decisions, cut costs, and avoid surprises. Let’s break down the details.
Does Credit Score Affect Car Insurance Rates?
Yes — in most states, credit scores do play a role in determining car insurance rates. Many insurers use a credit-based insurance score (CBIS) to assess risk. Studies have shown that drivers with stronger credit histories tend to file fewer claims, while those with poor credit are statistically more likely to file claims.
Insurance companies such as Allstate, GEICO, Progressive, and Nationwide often use CBIS when setting premiums, though regulations vary by state.