For Consumers

Credit scoring FAQs

  Important: As of June 20, 2021, insurers cannot use your credit scores to determine how much you pay for auto and homeowners insurance. If your company is charging you more, shop around. Companies have used credit scoring for two decades, so now is the best time to find a better deal.

Why do insurance companies use credit information?

Insurance companies believe there's a relationship between how you handle your finances and the likelihood you'll file a claim. 

If you don't get the best rate possible due to your credit information, your insurance company must advise you in writing and tell you why. They can list up to four reasons why you didn't get the best score. If this happens, you're entitled to 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

Does the insurance company need my permission to look at my credit history?

No. Federal and state law allows insurance companies to look at your credit history. However, Washington state Insurance Commissioner Mike Kreidler believes it's unfair, especially in today's economy. He successfully limited its use and has tried to ban the practice.


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. Also, ask if they check the credit history of other people insured on your policy, such as family members, and see how their credit history will impact your policy.


How often do insurers review my credit history?

Auto and homeowner insurers must review your credit history and update their records of it once every three years according to a state rule (


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?

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.

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. Once the mistake has been corrected, notify your insurance company in writing. They must reissue or re-rate the policy back to the policy's effective date.

You're allowed to request a free copy of your credit report once a year from each of the three nationwide credit reporting bureaus. The Federal Trade Commission has authorized to provide free credit reports.