If your credit is fair or poor, an auto insurance quote can sting twice as hard as it should. Most states allow insurers to factor a credit-based insurance score into your premium, and studies show drivers with poor credit can pay double what drivers with excellent credit pay for the same coverage. A small number of states have banned the practice for some or all lines of insurance. Here is the current list, plus how to shop smarter if you live somewhere that still allows it.
States That Fully Ban Credit-Based Insurance Scoring for Auto
Four states currently prohibit auto insurers from using credit information when setting rates. California passed Proposition 103 back in 1988, which limits auto rate factors to driving record, miles driven per year, and years of experience. Hawaii bans credit use in personal auto insurance under state law. Massachusetts has long prohibited the use of credit scores for auto insurance pricing. Michigan limits but does not fully ban the practice, insurers may use some credit-related factors but face stricter rules than in most states.
Maryland prohibits credit-based scoring for life insurance specifically, but allows it for auto and homeowners with restrictions. The exact mechanics vary, some states allow credit to be used at policy renewal but not at initial underwriting, and some allow it for tiering but not for outright denial. To see how quotes shake out across carriers in any state, Insurify compares offers from dozens of insurers in one search, which helps surface companies that weight credit less heavily. Quotes are estimates and final rates depend on the carrier's underwriting.
Washington State and the 2021 Ban
Washington made headlines in 2021 when the state insurance commissioner issued an emergency rule banning the use of credit scoring in auto and homeowners insurance for three years. The reasoning was that credit-based scoring disproportionately harmed lower-income and minority drivers, especially during the pandemic when credit profiles were volatile. The rule was challenged in court, and in 2022 a state judge struck it down on procedural grounds.
As of 2026, credit-based insurance scoring is permitted again in Washington, though the legislature continues to debate restrictions. If you live in Washington, check with each carrier about how they currently use credit, and confirm with the state Office of the Insurance Commissioner before assuming any ban is in effect. Comparing quotes across at least five insurers is the best way to find one that does not penalize you heavily for a low score.
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How a Credit-Based Insurance Score Differs From a FICO Score
A credit-based insurance score is not the same as the FICO or VantageScore lenders pull. Insurers use a separate model, often built by LexisNexis or FICO itself, that emphasizes different factors. Payment history and outstanding balances still matter, but insurers weight things like the length of credit history and types of accounts somewhat differently.
The correlation between credit and insurance claims is what insurers point to when defending the practice. Industry data shows people with lower insurance scores file claims more often on average, even when controlling for driving record. Critics argue the link is more about poverty than risk and that it amplifies existing inequities. Either way, the practical reality is that in most states your credit affects your rate, often more than your driving record does.
Other States With Partial Restrictions
A growing number of states have added rules short of an outright ban. Oregon prohibits insurers from using credit as the sole reason for non-renewal. Utah requires a discount, not just a surcharge, when credit is good, which keeps the average rate stable. New York limits when credit can be re-checked at renewal, and several states require carriers to disclose when credit is used in pricing.
This patchwork means the same driver with the same credit can pay very different rates in two neighboring states. If you live near a state line, it is worth checking whether registering in the other state is even an option, though most insurance is tied to your residence and primary garage location, so this rarely works as a strategy.
How to Lower Auto Insurance Rates With Bad Credit
If you live in a state that uses credit, several moves can offset the impact. Bundle auto with renters or homeowners insurance for a multi-policy discount of 10 to 25 percent. Take a defensive driving course, which many states require insurers to recognize with a discount. Raise your deductible from $250 to $500 or $1,000, which can cut premiums by 15 to 30 percent if you can absorb the higher out-of-pocket cost.
Look also at usage-based programs that track your actual driving through a phone app or plug-in device. If you drive safely, programs like Progressive Snapshot or Allstate Drivewise can save 10 to 30 percent and they downweight credit in the final rate calculation. Improving your credit itself helps, even a 50-point bump can move you into a better insurance tier at renewal time.
Shopping Quotes Without Hurting Your Credit
Getting auto insurance quotes uses a soft inquiry, which does not affect your credit score. That means you can shop as many carriers as you want without worrying about the inquiry footprint. Compare at least five quotes for the same coverage, and ask each company how they weight credit so you can spot the carrier that punishes a low score the least.
Re-shop your policy every six to twelve months, because carriers change their pricing models often and one company's relative position can shift quickly. Loyalty discounts rarely outweigh the savings from switching, especially if your credit improves between renewals.
Related Reading
- how credit score affects car insurance
- does paying car insurance build credit
- what is a good credit score
- how to improve your credit score
- how to build credit fast
Frequently Asked Questions
Can my insurance go up if my credit drops?
In most states, yes, insurers can re-check your credit at policy renewal and adjust your rate accordingly. The change usually shows up at the next renewal cycle, not mid-policy. Some states require advance notice when a credit-driven rate increase happens, so check your renewal paperwork carefully.
Do all insurance types use credit scores?
Auto and homeowners insurance use credit-based scores in most states. Life insurance underwriting may consider credit indirectly through financial questions but uses health and lifestyle factors more heavily. Health insurance under the Affordable Care Act cannot use credit at all, since federal law sets the rating factors.
Why does my credit affect my car insurance rate?
Insurers argue that statistical models show a correlation between credit history and the likelihood of filing a claim. They use this correlation to set prices that reflect predicted risk. Critics point out the model can disadvantage people who experienced medical emergencies or job loss, and several states have responded with bans or restrictions.
Will switching insurers help if I have bad credit?
Often yes, because each insurer weights credit differently in its proprietary model. A driver with a 580 credit score might pay 20 percent more at one carrier and only 5 percent more at another for identical coverage. Comparing quotes across multiple carriers reveals which one has the friendliest pricing for your specific profile.
