You’ve heard of the FICO credit score? Meet the version insurers use to figure how much they can charge you for a policy—a score they have no legal obligation to show you.

How your credit score raises your premium

Your score is used to measure your creditworthiness—the likelihood that you’ll pay back a loan or credit-card debt. But you might not know that car insurers are also rifling through your credit files to do something completely different: to predict the odds that you’ll file a claim. And if they think that your credit isn’t up to their highest standard, they will charge you more, even if you have never had an accident, our price data show.

Cherry-picking about 30 of almost 130 elements in a credit report, each insurer creates a proprietary score that’s very different from the FICO score you might be familiar with, so that one can’t be used to guess the other reliably.

The increase in your premium can be significant.  Our single drivers who had merely good scores paid $68 to $526 more per year, on average, than similar drivers with the best scores, depending on the state they called home.

And your credit score could have more of an impact on your premium price than any other factor. For our single drivers in Kansas, for instance, one moving violation would increase their premium by $122 per year, on average. But a score that was considered just good would boost it by $233, even if they had a flawless driving record. A poor credit score could add $1,301 to their premium, on average.


Average difference paid by drivers with “good” score vs. those with the best score


How Does Your Credit Score Affect What You Pay?

Click on your state for details and low-premium shopping leads for drivers with excellent, good, or poor credit scores.

Average extra cost of drivers with poor scores, as compared to drivers with excellent credit

  • $500 More
  • $1,000 More
  • $1,500 More
  • $2,000 More
  • $2,001+ More
  • States where credit scores don't affect premiums
Credit scores don't affect premiums in CA, HI, MA

Consumers are kept in the dark

Because insurance companies are under no obligation to tell you what score they have cooked up for you, you have no idea whether you have a halo over your head or a bull’s-eye on your back for a price increase.

Car insurers didn’t use credit scores until the mid 1990s. That’s when several of them, working with the company that created the FICO score, started testing the theory that the scores might help to predict claim losses. They kept what they were doing hush-hush. By 2006, almost every insurer was using credit scores to set prices. But two-thirds of consumers surveyed by the Government Accountability Office at about the same time said they had no idea that their credit could affect what they paid for insurance. Even today, insurers don’t advertise that fact. They usually won’t tell you what your score is; they don’t have to. If a sudden drop in your score causes them to raise your rates or cancel your policy, you’ll receive a so-called adverse action notice. But those notices “provide only cryptic information that’s of limited use,” says Norma Garcia, senior attorney and manager of the financial services program at Consumers Union, the advocacy arm of Consumer Reports.

California, Hawaii, and Massachusetts are the only states that prohibit insurers from using credit scores to set prices. In those states, insurers base premiums largely on a consumer’s driving record, the number of miles driven per year, and other factors. According to a 50-state study of insurance regulations by the Consumer Federation of America in 2013, California’s pricing practices, enacted as part of Proposition 103 in 1988, saved $8,625 per family during those 25 years.

You pay for accidents you didn’t have

You buy car insurance so that you’re protected financially in the event of a car crash. But an unfair side effect of allowing credit scores to be used to set premium prices is that it effectively forces customers to dig deeper into their pockets to pay for accidents that haven’t happened and may never happen.

For example, our single New Yorkers with good credit scores and clean driving records would pay an average of $255 more in annual premiums than if they had excellent credit scores. In California, those same drivers wouldn’t have to pay a penalty for having only “good” credit.

In the states where insurance companies don’t use credit information, the price of car insurance is based mainly on how people actually drive and other factors, not some future risk that a credit score “predicts.”

That pricing dynamic also artificially reduces the true sting of careless driving in states like New York. If you have an accident, your premium takes less of a hit because you have already paid for the losses that your merely “good” score predicted you would have. In California, the $1,188 higher average premium our single drivers had to pay because of an accident they caused is a memorable warning to drive more carefully. And the more carefully people drive, the safer the roads are for everyone. In New York, our singles received less of a slap, only $429, on average. 


Should You Get a Credit Score Exception?

During the Great Recession of 2007-9, legislators in states across the country became alarmed that the ailing economy’s impact on credit scores would jack up their constituents’ insurance costs. They scrambled to strengthen “extraordinary life circumstances exceptions” in state laws that allow insurers to set prices based on credit-score information. Partly as a response, 29 states adopted so-called NCOIL (National Conference of Insurance Legislators) provisions. Many of them allow consumers to request that their insurer not use credit scoring against them if they were affected by circumstances beyond their control, such as unemployment, divorce, serious illness, the death of a spouse, and identity theft.

But the provisions are weak. For one thing, “notification of extraordinary life circumstances exceptions is not required under most state laws,” says Neil Alldredge, senior vice president of state and policy affairs for the National Associate of Mutual Insurance Companies (NAMIC). And it’s not clear whether insurers adequately make consumers aware that those exceptions even exist.

Amica, which has more than 670,000 policies in force, said it receives only one such request per month. State Farm, the nation’s largest insurer, told us it can’t say how many requests it gets or how many are granted. “But I can tell you those numbers are small,” said Dick Luedke, a spokesman. “We are talking, after all, about ‘extraordinary’ life events.” Representatives from NCOIL and NAMIC said their organizations don’t keep track. 

7 Ways to Fight Unfair Pricing


Request an “extraordinary life circumstances exception” if you receive an adverse action. You should get one of those notices if credit scoring causes a higher premium, a reduction in coverage limits, a cancellation or nonrenewal of your policy, or a denial of coverage to begin with.


Shop at the companies that charged our model drivers with good and/or poor credit scores the lowest premiums. Check our state map for details


Monitor your credit reports to make sure they’re accurate, and ask to be rescored if you’ve found and corrected errors in your file. That’s important, because the information that determines your insurance credit score is plucked from them. Get your free yearly report from all three credit bureaus at


Use credit that insurer scoring models favor: national bank-issued credit cards (AmEx, Discover, MasterCard, and Visa).


Keep credit-card balances in check; the higher the balance, the more points you lose on your score


Avoid certain types of credit that insurance company credit-scoring models penalize you for: department-store credit cards, instant credit offered by stores to move big-ticket items; credit accounts from your local tire dealer, auto-parts store, or service station; and finance-company credit, including retailer credit cards.


Try not to add new credit. Scoring systems look askance at those who open new credit accounts frequently, and they can penalize you for just shopping around for credit because credit inquiries appear on your credit report.

The Problem With Uninsured Drivers

You share the road with an estimated 30 million uninsured drivers, according to the Insurance Research Council. Although every state except New Hampshire mandates that drivers have insurance coverage, some slip through the net of state enforcement by buying coverage to register a car, then letting it lapse.

It’s easy to demonize those consumers by assuming that they choose not to buy a product they can easily afford. “There are individuals out there who like to live on the edge” and drive without insurance, says an Allstate Web video.

But insurance credit scoring, which links customers’ premium prices to their creditworthiness, raises the cost of insurance for some low-income drivers and might make it unaffordable to them. In fact, research by the Consumer Federation of America found a strong correlation between state poverty rates and the percentage of uninsured drivers in a given state, which ranges from 4 percent in Massachusetts to 26 percent in Oklahoma. 

What’s worse, our own data show that when the uninsured try to get back on track and buy coverage, insurers tack on an additional price penalty. Our single policyholders who had a 60-day lapse in their coverage got socked with a $207 higher premium on average nationally. The penalty varied by state and ranged from zero in California to $834 per year in Michigan.

Insurers, however, dismiss the problem and say that insurance is plenty affordable for the poor. “Low-income consumers already spend more on alcohol and tobacco products or audio and visual equipment and service than they pay for auto insurance,” says the National Association of Mutual Insurance Companies.

Taxing the poor through credit scoring and by other means not related to driving causes problems for all insured drivers, because painfully high insurance prices tempt financially strapped consumers to drive without insurance. That, in turn, is why we recommend uninsured/underinsured motorist protection, which covers your losses caused by another driver who has insufficient or no car insurance. UI/UIM insurance added $10 to $230 per year to our single drivers’ bill, on average, depending on the state.

Our single policyholders who had a 60-day lapse in their coverage got socked with a $207 higher premium on average nationally.

Highest: Michigan