How does your credit score affect the price of your car insurance rates? How does that vary by state?
BASED ON A NATIONAL ANALYSIS OF 61 MILLION CAR INSURANCE RATES
* Most consumers know that credit plays a big role in their finances, whether they're applying for a credit card or considering a car or home loan.
What most consumers don't realize is that, in nearly every state, credit also has a huge impact on what they pay for car insurance. In fact, dropping just one credit tier can increase a driver's car insurance premium an average of 17% or $355 per year.
If this sounds concerning to you, you're not alone. Three states (California, Massachusetts, and Hawaii) currently ban insurers from using credit in car insurance pricing. Michigan will become the fourth once legislation passed in May 2019 goes into effect next year.
Just how big of an impact credit has on insurance rates varies by insurer and location. Here, we review the impacts in each state--and share what consumers can do to make sure they're getting the best rate.
Drivers with poor credit pay twice as much for car insurance as those with exceptional credit
Most drivers are unaware that credit affects their car insurance rates
Data: How credit impacts drivers in every state
Drivers can save 17% (or $355) when they improve their credit score by one tier
Why credit in car insurance pricing is so controversial
U.S. Drivers With Poor Credit Pay Twice as Much for Car Insurance as Those With Exceptional Credit
The Zebra's analysis of 61 million car insurance rates shows that drivers with poor credit (those with a credit score lower than 580) pay about $2,729 per year for car insurance. Drivers with exceptional credit (those with a credit score of 800 or higher) pay $1,308--less than half as much. In other words, drivers with poor credit pay $1,421 more--or 109% more--each year than drivers who have exceptional credit--even if they have the exact same driving record.
U.S. Car Insurance Rates by Credit Tier Poor (300-579) $2,729 Average (580-669) $2,240 Good (670-739) $1,841 Excellent (740-799) $1,537 Exceptional (800-850) $1,308 Note: Table made from bar graph. Most Drivers Are Unaware That Credit Impacts Their Car Insurance Rates
As many as 95% of auto insurers use credit information to price policies (in states where it's legally permitted), and the financial impact for consumers can add up to hundreds or even thousands of dollars per year.
Yet, consumers are...