Many drivers are surprised to learn that their credit score can influence how much they pay for car insurance. In 2025, most U.S. insurers still use credit-based insurance scores to assess risk. But how does this work—and is it even legal? Let’s break it down.
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📉 What Is a Credit-Based Insurance Score?
It’s a modified version of your regular credit score used by insurers to predict your likelihood of filing a claim. It considers factors such as:
- Payment history
- Outstanding debt
- Length of credit history
- Types of credit
- Recent credit inquiries
Note: It does NOT consider your income, race, age, or marital status.
📊 How Credit Score Affects Insurance Rates
Generally, drivers with poor credit pay significantly more for car insurance than those with excellent credit—even with a clean driving record.
- Excellent credit: Lowest rates
- Average credit: Moderate rates
- Poor credit: Highest rates (often double or more)
📍 States Where Credit Use Is Restricted or Banned
Some states have outlawed or limited the use of credit scores in insurance pricing:
- California
- Hawaii
- Massachusetts
- Michigan (new regulations in effect for 2025)
For more info, visit: NAIC - State Insurance Regulations
💰 How to Lower Your Auto Insurance If You Have Bad Credit
Even with a poor credit score, you can still take steps to reduce your premium:
- Compare multiple quotes to find the most credit-friendly insurers
- Increase your deductible
- Bundle your policies
- Maintain a clean driving record
- Ask about applicable discounts
- Work on improving your credit over time
📚 Related Articles:
🔗 Useful External Resources:
✅ Final Thoughts
Yes, in most states your credit score still plays a role in determining how much you pay for auto insurance in 2025. But even if your credit is less than perfect, there are ways to minimize its impact and find affordable coverage.