Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Written by Rachael Brennan
Licensed Insurance Agent Rachael Brennan

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jun 22, 2022

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In a nutshell...

  • Good credit scores are connected to cheaper car insurance rates
  • Insurance companies increase rates for drivers with bad credit
  • Your insurance history is also considered when getting a quote

Did you know car insurance companies look at your credit score when you request a policy? Insurance companies examine your credit to determine your risk. 

But how much is car insurance based on credit? Don’t worry – we’re here to help. 

Our guide explains how your credit score affects auto insurance rates and why your credit score is considered. 

Continue reading to learn more about credit-based car insurance. 

Will my credit score affect my car insurance?

Yes, it will. Your credit score (often called FICO score or credit history) impacts your auto insurance rates. Insurance correlates credit score to your risk of filing car insurance claims. 

For example, a driver with excellent credit could pay up to 35% less for insurance because their credit score is connected to lower risks of getting into an accident or filing claims. 

Drivers with fair and poor credit have the opposite effect. Therefore, car insurance companies raise rates higher than average. 

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What is the average cost of car insurance based on credit scores?

Different credit levels produce various auto insurance rates. Higher credit scores generate more affordable insurance rates, but low credit scores correlate to expensive rates. 

Let’s examine the average cost of full coverage insurance based on credit scores. 

Average Monthly Car Insurance Rates by Credit Score
Credit ScoresMonthly Rates
Excellent Credit (750 to 850)$124
Good Credit (700 to 749)$140
Fair Credit (650 to 699)$155
Bad Credit (300 to 649)$323
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Bad credit can double car insurance rates. But, good and fair credit can raise your rates by $16 to $31. 

How much is credit-based car insurance in each state?

Where you live is another significant factor that affects your insurance. The same credit score in one state could result in a very different rate in another state. 

Let’s look at a table that shows how credit levels affect various states. 

Average Monthly Car Insurance Rates by State and Credit Scores
StatesMonthly Rates w/ Bad CreditMonthly Rates w/ Fair CreditMonthly Rates w/ Good CreditMonthly Rates w/ Excellent Credit
Alabama$259$158$135$128
Alaska$189$144$130$125
Arizona$234$147$129$119
Arkansas$288$179$160$138
Colorado$277$184$168$140
Connecticut$247$150$154$112
Delaware$249$163$148$126
Florida$485$253$197$180
Georgia$262$183$165$155
Idaho$146$101$87$85
Illinois$219$138$124$104
Indiana$218$123$105$92
Iowa$197$117$105$91
Kansas$264$160$142$127
Kentucky$344$211$177$161
Louisiana$386$253$227$201
Maine$119$76$80$64
Maryland$245$163$156$130
Minnesota$257$152$137$120
Mississippi$224$158$149$129
Missouri$236$155$138$122
Montana$241$159$145$130
Nebraska$239$141$128$108
Nevada$273$200$187$170
New Hampshire$181$109$106$79
New Jersey$276$165$146$115
New Mexico$211$130$118$108
New York$406$215$193$161
North Carolina$147$121$110$113
North Dakota$199$123$105$92
Ohio$173$103$86$80
Oklahoma$252$171$156$140
Oregon$191$128$112$104
Pennsylvania$213$149$123$126
Rhode Island$258$178$168$139
South Carolina$231$137$126$104
South Dakota$262$158$137$119
Tennessee$201$128$112$98
Texas$254$176$152$139
Utah$197$123$109$95
Vermont$156$101$101$82
Virginia$192$119$109$90
Washington, D.C.$256$172$155$143
West Virginia$220$145$125$113
Wisconsin$453$112$99$84
Wyoming$196$131$125$102
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Maine is the most affordable state for credit-based insurance across all credit levels, but Florida and Louisiana are the most expensive states. 

What are the cheapest car insurance companies based on credit history? 

Insurance companies review your credit history to determine your risk. The better your credit score, the better your chances are of securing cheap auto insurance. 

But which companies have the most affordable rates based on credit? Let’s look at a few estimates to find out. 

Comparing Monthly Car Insurance Rates by Credit and Company
CompaniesMonthly Car Insurance Rates w/ Good CreditMonthly Car Insurance Rates w/ Bad Credit
Allstate$227$321
American Family$151$226
Auto-Owners$134$236
Erie Insurance$122$249
Farm Bureau Insurance$128$204
Farmers$210$297
GEICO$150$199
Nationwide$171$222
Progressive$172$269
State Farm$105$223
Travelers$164$333
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State Farm, Erie Insurance, and Farm Bureau Insurance have the cheapest auto insurance for drivers with good credit. Meanwhile, GEICO and Nationwide have the most affordable rates for drivers with bad credit. 

Try shopping around with smaller insurance companies if you can’t find cheap coverage through these companies. 

What states don’t allow credit-based insurance?

Not all states allow insurance companies to use credit scores to determine auto insurance rates. Check out the list below to see which states don’t allow credit-based car insurance rates:

  • California
  • Hawaii
  • Maryland
  • Massachusetts
  • Michigan
  • Oregon
  • Utah

Each state has different rules on how insurance companies can use credit. Occasionally, you should check your insurance policy to see if anything has changed, particularly at renewal. 

How can you get cheaper insurance rates with bad credit?

There are multiple methods you can use to get more affordable rates. Check out these four tips to learn how:

  • Improve your credit score. When your credit score goes up, you can get cheaper rates. 
  • Maintain a clean driving record. You can save at least 20% on car insurance rates if you don’t have any accidents or traffic violations on your driving record.
  • Use your VIN. Your VIN can show the insurance company features that could lower your auto insurance rates. 
  • Get good grades. Students can help their parents or legal guardians get cheaper rates by maintaining a high GPA (3.0 or better). 

Did we miss anything? Ask the insurance company about other car insurance discounts and stack as many deals as possible. 

Is liability-only car insurance more affordable?

Yes, it is. Liability insurance is 53% cheaper than full coverage insurance on average. However, liability coverage doesn’t provide coverage for accidents where you’re at fault in a car accident. 

Can insurance quotes affect your credit score?

No, it shouldn’t. Insurance quotes have a soft pull on your credit. That means auto insurance companies look at your credit report to see basic information about your credit history.

Most insurance companies don’t use hard pulls on your credit. A hard pull is an in-depth credit report that shows more information and lowers your credit score slightly. 

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How do you improve your credit score?

We found four ways that can help improve your credit. Here’s what you could do to improve your credit score:

  • Make payments on time. Pay any debts on time to improve your credit.
  • Pay off credit card debt. Make payments on time and pay off balances in full as soon as possible.
  • Have multiple types of credit. Keep diverse credit types, like loans and credit cards.
  • Create a longer credit history. A long credit history shows you’re more experienced managing your credit over time.

Don’t forget to let your insurance company know that you’ve improved your credit. Bear in mind that your insurance company also looks at your claims history. 

Your insurance history shows how many claims you’ve made with previous insurance companies. Having no insurance history can also drive up your rates. 

How Credit Score Affects Car Insurance: The Bottom Line

Most states allow auto insurance companies to use your credit score to determine your risk. If you have bad credit, you’ll pay more for car insurance. However, drivers with good credit have cheap car insurance rates. Poor credit doesn’t last, so do whatever you can to improve your credit and get more affordable rates.