How Does Your Credit Score Affect Auto Insurance Rates in 2026?
Drivers with poor credit pay nearly twice as much for car insurance, compared to people with good credit.
That's because car insurance companies believe people with bad credit are more likely to file a claim in the future. However, getting a car insurance quote won't affect your credit score.
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How much does credit affect car insurance rates?
People with bad credit pay an average of $204 more per month for full coverage than people with good credit.
But this amount depends on your insurance company, where you live, your driving record and other factors.
For example, American Family charges people with bad credit pay $104 per month more for full coverage than those with good credit. But State Farm charges people with bad credit $609 per month more.
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Bad credit car insurance rates in your state
Insurance companies don't all use your credit score the same way. Instead, companies use your credit score as part of their own scoring system, sometimes called an insurance score. So, a "good" score with one company may be considered "average" or even "poor" elsewhere.
How much does credit affect car insurance in your state?
Poor credit raises rates the most for drivers in Washington, D.C., where people with bad credit pay three times more for full coverage insurance.
The state of Washington has the smallest increase for people with a poor credit score among states that let credit affect your rate, at just 42%.
Four states — California, Hawaii, Massachusetts and Michigan — ban companies from using your credit report to determine insurance rates.
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Full coverage rates for drivers with bad credit
Do insurance companies check your credit?
Car insurance companies almost always check your credit when you buy a new policy.
However, California, Hawaii, Massachusetts and Michigan don't allow insurance companies to use credit to determine car insurance rates.
Why does my credit score affect my car insurance rates?
Your credit score has a major effect on car insurance prices because insurance companies have consistently found people with lower credit scores are more likely to file insurance claims.
That makes people with bad credit more expensive to cover. So, the majority of insurance companies use credit scores as part of how they determine what you pay for coverage.
Research by the Federal Trade Commission shows that this holds true even if you control for things like race, income and where you live.
Still, insurance companies generally don't just look at the number on your credit score — they consider your full credit report to come up with what they call your credit-based insurance score.
A credit score is a number that estimates how safe it is for a company to lend you money. The higher your score, the more likely a bank thinks you are to pay back money you borrow.
It's based on five main factors:
- Payment history: How consistently you pay your bills
- Amount owed: How much debt you have, compared to your credit limit
- Length of credit history: How long you've had credit accounts, like credit cards or student loans
- Mix of credit types: The types of credit accounts you have open
- New credit: How often you apply for new credit cards or loans
You may also pay more for insurance if you don't have a credit history. From an insurance company's perspective, this is often the same as having poor credit.
Credit scores range from 300 to 850. Companies typically divide scores into several tiers.
Credit score tiers by FICO Scores
Tier | FICO Score |
|---|---|
| Excellent | 800-850 |
| Very good | 740-799 |
| Good | 670-739 |
| Fair | 580-669 |
| Poor | 300-579 |
Do insurance quotes affect your credit score?
Getting a car insurance quote shouldn’t affect your credit score.
Car insurance companies do what's called a "soft pull" when you get a quote, which doesn't influence your credit score. In contrast, a "hard pull" credit check impacts your credit score.
- Soft pulls only check some basic info and have no impact on your credit score.
- Hard pulls provide a full credit history and slightly lower your credit score for a short time. For example, if you apply for multiple credit cards in a short period of time, the buildup of hard pulls can lower your score.
Frequently asked questions
Which car insurance companies check your credit?
Every major car insurance company checks your credit before selling you a policy. That includes Geico, State Farm, USAA, Progressive, Allstate and Liberty Mutual. Only a few insurance companies won't check your credit.
Does credit score affect car insurance rates?
Yes, a higher or lower credit score can have a big impact on your insurance rate. Poor credit increases full coverage rates by 98% compared to good credit.
Do insurance quotes affect your credit score?
No, getting an auto insurance quote won't affect your credit. Insurance companies check your credit with a soft pull. A soft pull doesn't provide a full credit history, nor does it impact your score.
Does paying car insurance build credit?
Paying your car insurance bill on time won't typically affect your credit score. That's because car insurance companies don't usually share your payment details with the credit bureaus. However, if you don't pay your car insurance bill and you're sent to collections, that can hurt your credit score.
Methodology
To determine how bad credit affects car insurance rates, ValuePenguin collected quotes from ZIP codes in all states that use credit scores as part of calculating insurance rates. Quotes are for a 30-year-old male driver with a 2018 Honda Civic EX and a clean driving record.
Rates are for a full coverage policy with higher liability limits than required in each state, along with comprehensive and collision coverage.
- Bodily injury liability: $50,000 per person; $100,000 per accident
- Property damage liability: $50,000 per accident
- Uninsured and underinsured motorist liability: $50,000 per person; $100,000 per accident
- Personal injury protection: Minimum required by state
- Comprehensive and collision coverage: $500 deductible
Insurance rate data came from publicly sourced insurance company filings collected by Quadrant Information Services. Quotes should be used only for comparative purposes only. Your own quotes will be different.
Senior Writer
Lindsay Bishop is a Senior Writer at ValuePenguin, where she educates readers about home, auto, renters, flood and motorcycle insurance.
Lindsay began her career in the insurance and financial industry in 2010. She was a licensed auto, home, life and health insurance agent and held Series 6 and 63 financial licenses.
After a hiatus from the financial sector, Lindsay returned to the industry as a content writer for ValuePenguin in 2021. She enjoys having the opportunity to help readers make smart decisions about their insurance so they can be prepared for anything life throws their way.
When Lindsay isn't writing about insurance, you can find her spending time with family, enjoying the outdoors on Sunday long runs or riding her Peloton.
How insurance helped Lindsay
As a homeowner for 15 years located in South Carolina, Lindsay has plenty of experience navigating the coastal insurance market and managing the claims process. That includes successfully negotiating a full roof replacement claim.
Expertise
- Home insurance
- Car insurance
- Flood insurance
- Renters insurance
- Motorcycle insurance
Referenced by
- CNBC
- Yahoo Finance
- Miami Herald
Education
- BS/BA Economics, University of Nevada Las Vegas
Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
