How Does My Credit Score Affect My Insurance Rates?

Insurance Neighbor • March 2, 2025

Share this article

Person sitting on a couch using a tablet in a bright living room with shelves and plants nearby
March is National Credit Education Month—and many of us could use some help. When we think about credit scores, most of us are aware that our credit scores can affect loan approvals, car financing, credit card limits, or whether you are at the top of the list of tenants a landlord will consider. 
Another area where credit score plays a critical role is in determining insurance rates. Your credit score, calculated from the information in your credit report, directly influences how much you pay for auto, homeowners, or renters insurance.

What Is the Connection Between Credit Scores and Insurance Rates?

Insurance companies are in business for profit and are concerned with managing risk. Each policyholder represents a unique set of probabilities. The goal is to assess the likelihood that you will file a claim, the potential payment for that claim, and your overall reliability as a customer. They use a combination of factors, including your credit score, to assess the risk. 
They do this because studies have shown a correlation between claim behavior and credit scores. Insurers assert that individuals with lower credit scores are statistically more likely to file claims, and those claims tend to be costlier. Although this is not true for every person, data-backed trends provide insurance companies with the rationale for factoring credit scores into their calculations. 
Insurers do not look at your raw credit score like a bank or lender might. Instead, they use a specialized “insurance score” that considers credit history but focuses on factors insurers believe are more predictive of your risks as a policyholder. Outstanding debts, late payments, and the length of your credit history could play a role in determining your insurance score.

What Impact Does Credit Score Have on Insurance Rates?

Your credit score could influence your rates for auto, homeowners, or renters insurance as follows:

  • Higher score = lower rates: If your credit score is strong, insurers perceive you as financially responsible and less likely to file frequent or frivolous claims. Consequently, you are likely to have access to better insurance rates.
  • Lower score = higher rates : On the flip side, a lower credit score may signal financial instability to insurers. They may require higher premiums to offset the perceived risk.
  • Exception to the rule: In some states, insurance companies are restricted or prohibited from using credit scores to determine insurance rates. Your credit score may not affect your insurance premiums if you reside in one of these states. 

How Can You Improve Your Insurance Rates?

If your credit score affects your insurance rates, taking the following steps can improve your credit score. While it will not happen overnight, these actions can make a significant difference over time:

  • Pay bills on time: Payment history is one of the most significant factors affecting credit scores.
  • Reduce credit card balances: A high ratio of balances to limits can negatively impact your score. 
  • Avoid opening new credit accounts: It can temporarily lower your score due to hard inquiries on your credit report.
  • Check your credit report: Review the report for errors that could drag down your score unnecessarily. 
  • Meet with our experienced agent: We can work to get you the best available rates for the insurance coverage you need. 

Review Your Insurance Rates

< Older Post Newer Post >

Recent Posts

White boat docked beside a white camper on a grassy lakeshore under a cloudy sky.

Boat, RV, and ATV Insurance: What Recreational Vehicle Owners Need to Know

By Insurance Neighbor • August 16, 2026
Summer is peak season for recreational vehicles. Whether you're out on the water with a boat, exploring the country in an RV, or hitting a trail on an ATV, August brings some of the highest usage of the year for these vehicles, and that makes it a great time to make sure your insurance coverage is in order. Many people assume their standard auto or…
Man reviewing papers at a café table with a laptop, smartphone, and white chair beside him

General Liability Insurance 101: A Foundation for Every Small Business

By Insurance Neighbor • August 4, 2026
What general liability insurance covers and why every Albany, NY small business needs it. V. Mathis Insurance Agency, 20+ years local. Request a quote today.
Two people sitting in a car, one driving and one in the passenger seat, both smiling.

Back-to-School Season: Does Your Auto Insurance Cover a Teen Driver?

By Insurance Neighbor • August 1, 2026
Every August, millions of families prepare for back-to-school, and for households with a newly licensed teen, that checklist includes an important question: Is your auto insurance ready? Adding a teenager to your auto insurance policy is one of the most significant coverage changes a family can make. Teen drivers are statistically among the highest-risk drivers on the road, which affects both your coverage needs and…
White cargo van driving down a palm-lined residential street at dusk.

Commercial Auto Insurance: What Business Owners Should Know About Covering Company Vehicles

By Insurance Neighbor • July 19, 2026
Whether your business relies on a single work truck or a fleet of delivery vans, the vehicles you use for business purposes likely need more than a standard personal auto insurance policy. Commercial auto insurance is designed to cover vehicles used for business operations and can provide protections that personal policies typically do not. Understanding the difference between the two can help business owners avoid…
Two people carrying boxes up stairs in a bright apartment during a move

Renters Insurance: The Affordable Coverage Most Renters Don't Know They're Missing

By Insurance Neighbor • July 16, 2026
If you rent your home, apartment, or condo, you may assume that your landlord's insurance policy protects your belongings. Unfortunately, that's a common misconception—and a costly one. A landlord's insurance policy typically covers the physical structure of the building but not the personal property of the people who live in it. Renters insurance is designed to fill that gap, and it's often more affordable than…
Two coworkers collaborating at a desk with dual monitors in a bright office

Cyber Liability Insurance: Does Your Small Business Really Need It?

By Insurance Neighbor • July 4, 2026
When most people think of cyberattacks, they picture large corporations making headline news after a major data breach. But the reality is that small businesses are frequent targets of cybercriminals—and often less prepared to handle the financial and operational fallout. Cyber liability insurance is designed to help businesses manage the costs associated with data breaches, ransomware attacks, and other cyber incidents. If your business stores…
Two men in a car, one driving and one in the back seat drinking from a bottle

Does Your Auto Insurance Cover Rideshare Driving? What You Need to Know

By Insurance Neighbor • July 1, 2026
Rideshare driving has become a popular way for millions of Americans to earn extra income. Whether you drive for a transportation network company full time or just on weekends, it's important to understand how your auto insurance applies—and where it may fall short. Many drivers are surprised to learn that their personal auto insurance policy may not cover them while they're working on a rideshare…
Person writing at a desk in a workshop, with boxes and tools on the walls and a laptop nearby.

What Is a Business Owner's Policy (BOP) and Is It Right for Your Business?

By Insurance Neighbor • June 18, 2026
If you own a small or medium-sized business, you've probably heard the term "Business Owner's Policy" or BOP. It's one of the most common types of commercial insurance, but many business owners aren't sure exactly what it includes — or whether it's the right fit for their needs. Here's a clear breakdown. What Does a BOP Include? A Business Owner's Policy typically combines three core…
Two people laughing in a car, one driving and one clapping, with bright sunlight streaming in.

Summer Road Trips and Your Auto Insurance: What Every Driver Should Know

By Insurance Neighbor • June 16, 2026
School is out, the days are longer, and millions of Americans are gearing up for summer road trips. Before you load up the car and point it toward the horizon, it's worth taking a few minutes to understand what your auto insurance covers — and where the gaps might be. Does Your Current Coverage Travel With You? Good news: your personal auto insurance generally follows…
Person in apron writing on a clipboard at an outdoor coffee cart

Protecting Your Business This Summer: Why Seasonal Risks Deserve a Coverage Review

By Insurance Neighbor • June 4, 2026
For many businesses, summer is the busiest and most profitable time of year. From restaurants and retail shops to contractors and event venues, the warmer months bring increased foot traffic, more employees, and new operational challenges. That also means new risks — and it's worth making sure your business insurance is ready for the season ahead. Increased Foot Traffic and Premises Liability More customers on…
Show More