Does Credit Score Affect Car Insurance?


You probably already know that people pay different car insurance rates. Everything from your age to your marital status to your driving history is factored into your car insurance rate. That’s not all, though.


Far too few people realize that insurance companies use credit scores when deciding on a driver’s car insurance premiums. Just like the car you drive and your driving record, most auto insurance companies determine rates by using your credit history. Let’s look a bit deeper in why, and what you can do to improve your FICO score.


Table of Contents

  • Why Does Credit Score Affect Your Car Insurance?
  • Tips for Improving Your Credit

Why Does Credit Score Affect Your Car Insurance?

Credit Score Affects Your Car Insurance

A credit score is a number that lenders use to help them decide how financially responsible you are, and how likely it is they will be repaid on time if they give a person a loan or a credit card. The score ranges from 300 to 850. In 2020, the average FICO® Score in the U.S. was 710.


While it may not seem fair, these scores aren’t based on guesses and assumptions. Your credit report is built on your credit history. Some factors that may affect credit scores are:

  • Your total debt
  • Types of accounts
  • Number of late payments
  • Age of accounts


Credit based insurance scores are based on the idea that if you take out loans you don’t pay back, you’re likely to lapse on your car insurance payments as well. If they don’t get paid, it’s a problem for everyone! They’ll drop you as a client and you won’t have the full coverage you think you do.

Tips for Improving Your Credit

Tips for Improving Your Credit

The Federal Trade Commission tells us that your credit score reflects your likelihood to repay debt responsibly. It is based on your past credit history and current credit status. If you want to improve your score, you need to show lenders you can do this.


The goal is to have a favorable debt to income ratio. Use your credit card for emergency purposes only and then make your payments; never lapse on paying what you owe and don’t rack up debt buying frivolous things you can’t afford. The same goes for auto loans, your mortgage, and any other debt you may owe. The more you prove you can and will make payments when someone loans you money, the higher your score will go.


As tempting as it may be, you don’t need to constantly look at your number. Checks of your credit can actually bring your score lower. Get a free copy of your credit score once a month. This will help you keep up with your credit and show you where you’re improving.


If you need car insurance and your credit score is lower than you would like it to be, Pronto Insurance can help. We offer many low-cost car insurance policies in Illinois so you don’t have to choose whether or not to pay your bills. Remember, the more bills you pay- the higher your score goes!

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