It feels like it shouldn’t be legal, but in most of the country it is: your credit history helps set your car insurance premium. Insurers don’t pull your regular FICO score — they use a credit-based insurance score, a related number that statistically correlates with how likely you are to file a claim.
How much it actually costs
Across the carriers we track, moving from excellent to poor credit raises the average annual premium by roughly 50% to 110% — and in some states the gap is wider than the surcharge for a recent at-fault accident. In other words, your credit can cost you more than a crash.
Poor credit can raise your car insurance premium by up to 110%
Where it’s banned
A handful of states restrict or prohibit the practice entirely:
- California — banned for auto insurance.
- Hawaii — banned for auto insurance.
- Massachusetts — not permitted.
- Michigan — heavily restricted.
If you live elsewhere, credit is almost certainly in the mix.
What you can do
- Check your score before you shop. Errors on your credit report can quietly inflate your premium.
- Re-shop after your credit improves. A better score can unlock a lower rate at renewal — but only if you ask.
- Compare carriers. Each weights credit differently, so the cheapest insurer for good credit isn’t always cheapest for fair credit.
The takeaway: treat your credit as part of your insurance strategy, not just your borrowing. The two are more connected than the agency lets on.