How Credit-Based Insurance Scores Work

A credit-based insurance score is a rating built partly or entirely from information in your credit history. It is used to estimate how likely someone is to file an insurance claim, not how likely they are to repay a loan. Insurers use it, along with other factors, to decide whether to offer coverage and how to price it.

Several states limit how it can be used, and a few restrict it much further. Because the score depends on your credit report, a change in your credit can show up in your price at renewal. That depends on the insurer and the state. This article explains the score, what feeds it, where the state rules are, and what to look for on a renewal notice.

The NAIC, the association of state insurance regulators, says insurers often use credit information when deciding whether to offer auto insurance and how much it will cost. ¹ The scores were introduced by the Fair Isaac Corporation (FICO) in the early 1990s. FICO estimates that about 95 percent of auto insurers use them in states where the practice is allowed. ¹

It is not the same as the credit score you see when applying for a loan. Both draw on credit report information, but traditional scores predict loan repayment and insurance scores predict claims. ¹ Insurance scores may also weigh credit factors differently. ¹ You usually do not see the insurance score itself. Industry sources describe these ratings as confidential. ³

Insurers mainly use the scores in two ways. Underwriting decides whether you are eligible for coverage, and rating decides the premium. ¹ Insurers may sort people into risk groups and adjust premiums up or down by group. ¹

The score draws on your credit report, but the exact formula belongs to the company that builds the model. We could not find a public, regulator-published list of weights, so we do not give one here. What the sources do say is useful:

• The score is only one input. The NAIC lists claims history, driving record, location, coverage limits and deductibles as other things insurers weigh. ¹
• Some states bar certain inputs. Alaska's entry in the NAIC chart says income, gender, race, religion, marital status, ZIP code and nationality may not be factors. It also says an absent credit history may not be counted against you. ²
• Some states also keep medical collection accounts out of the score. Michigan and Colorado are examples in the chart. ²

Because the score relies on your credit report, errors or outdated entries can affect insurance outcomes. The NAIC notes that consumers generally have the right to notice, to review their credit report and to dispute inaccuracies. ¹

The NAIC says that in most states insurers cannot use these scores as the sole reason to raise rates or to deny, cancel or refuse to renew a policy. Some states add restrictions or prohibit certain uses. ¹ The NAIC publishes a state-by-state chart of these rules, and your state insurance department can confirm what applies where you live. Examples from that chart:

These are summaries of a chart reviewed by the NAIC in 2025, not legal advice. Rules change, so check the chart and your state insurance department for the current text. Many states also require notice when credit information played a role in an adverse decision. ¹

Your insurer can only price on the credit information it has. If your credit report changes and your insurer updates your score, the new score can move you into a different risk group. Whether and how often that happens varies by insurer and state, and we found no source giving a general schedule.

The state rules offer some clues:

• Alaska's entry says an insurer using credit information must disclose that in writing when the application is taken and again at renewal. ²
• Colorado's entry says insurers must notify consumers that new or updated credit information will be used. ²
• Washington's entry says that when an insurer updates a score, it must update all the information needed to calculate it. ²
• Massachusetts's entry says that if a price is increased because of a credit report, the consumer must be notified within 10 business days and has the right to a free copy of the report within 60 days of the notice. ²

The effect can run either way. A 2017 Arkansas insurance department report on personal lines policies, summarized by Triple-I, found credit information lowered the final premium in nearly 55 percent of policies and raised it in 19.8 percent. It was neutral in the remaining 25.7 percent. ³ That is older, one-state data and does not predict any individual outcome.

A different price at renewal often has other causes. See why car insurance went up with no accident and how to read your renewal notice. If a rate change was part of a filing, what a rate filing is explains the process. A filed or approved average applies to existing policyholders as a group and is not a prediction for one premium.

Check your credit reports for errors. Note that the NAIC says consumers can dispute inaccuracies. ¹ If you think credit information was handled incorrectly, contact your insurer and your state insurance department. We do not give advice on handling disputes. You can also Compare quotes from different companies. Any quote is an estimate, not a final or binding price, and we cannot promise any savings.

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• ¹ Official record: NAIC explanation of what credit-based insurance scores are, FICO's estimate of use (about 95 percent of auto insurers), and the general state limits.
• ² Official record: NAIC state chart summarizing the Hawaii, Massachusetts, Michigan, Colorado, Washington and Alaska provisions, the three-year recalculation, and the 10 business day and 60 day notice periods.
• ³ Reported: Triple-I summary of a 2017 Arkansas insurance department report (percentages of policies where credit information lowered, raised or did not change the premium).