For Consumers

Credit scores and insurance

  Important: There is currently no ban on insurance companies using credit information when deciding what to charge for insurance premiums.

Why do insurance companies use credit information?

Insurance companies think that how you manage your finances affects how likely you are to make a claim.

State and federal laws allow insurance companies to look at your credit history. If you don't get the best rate possible due to your credit information, your insurance company must tell you in writing and explain why. They can list up to four reasons why you didn't get the best score. If this happens, you can get a free copy of your credit report from the credit agency your insurer used.

How do insurers use credit history?

Many auto and homeowner insurance companies look at consumer credit information to decide:

  • Whether to issue or renew an insurance policy
  • How much premium to charge

Most companies that use credit information create an insurance credit score, and their formulas differ. They calculate your score using information from your credit history and other factors. Most weigh recent history more heavily than old credit history. Some factors they consider include:

  • Bankruptcy, collections, foreclosures and liens generally lower your insurance credit score
  • Timely payment of your bills
  • The amount of time you’ve been in the credit system
  • Number of open lines of credit
  • Outstanding debt
  • The credit history of the first person named as the insured on a policy. Be sure to ask your agent about how that can affect your rates

How do I know if an insurance company is looking at my credit?

Ask your insurance agent or company if they use credit information to decide if they'll insure you and to set your premium. You can also ask if they check the credit history of other people insured on your policy, like family members. Find out how their credit history will affect your policy. Also, according to a state rule (, auto and homeowner insurers must check your credit history every three years. They also need to update their records of it.

What if I don't have a credit history?

If you don’t have a credit history, insurers cannot deny you coverage. However, they can use this to set your premium if they've given us data showing that people without credit histories are more likely to file a claim.

Also, sometimes an insurer will find “no hits” or “no score.” This means they can’t find a meaningful credit history for you. If you think you have a credit history but the insurer cannot find it, make sure your agent or insurance company has your correct name, address, Social Security number and birth date.

What credit information can insurers not use?

Insurance companies cannot use your credit history by itself to deny you coverage or cancel your policy. They also cannot use the following factors to deny you coverage or set your premiums:

  • The number of credit inquiries
  • Collection accounts identified as medical bills
  • Buying or financing your first vehicle or first house that adds a new loan to your existing credit history
  • Using a particular type of credit card, debit card, or charge card
  • Your total available line of credit

What if there's a mistake in my credit history?

If you think there's a mistake in your credit history that's impacting your insurance premiums, contact the credit reporting agencies. After you have corrected the mistake, notify your insurance company in writing. They must reissue or re-rate the policy back to the policy's effective date.

You can ask for a free copy of your credit report every year from each of the three credit bureaus. The Federal Trade Commission has authorized to provide free credit reports.