How Your Credit Score Affects Your Car Insurance Rates

Knowing how your credit score affects your car insurance rates can help you find more affordable premiums. A good credit score reflects well to insurance companies because it shows you are a responsible person and driver. A poor credit score will make you seem riskier to providers and will increase your rates. Learn how your credit score affects your auto insurance rates with our guide below, and start comparing free insurance quotes to find the most affordable rates on your policy.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Nov 12, 2020

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You may not know be aware, but your credit score actually says a lot about you other than your financial habits. Insurance companies consider your credit rating to be a good gauge of how responsible of a person you are.

Along with your education level, your choice of careers and quite a few other things, your credit score is a factor in how much you will pay for insurance coverage. Knowing how your credit score affects your car insurance rates can help you find more affordable premiums.

Why Credit Matters

A good credit score paints you in a favorable light. A person that is reliable in paying their bills in a timely manner and keeping their debt level reasonable is by all appearances a responsible person. Just like banks, when they are considering you for a loan, you insurance company looks at its clients as an investment. A person that has shown financial responsibility is a much safer investment for insurance companies.

Credit and Education

Getting a college education requires personal responsibility and discipline. These are favorable personality traits. If an insurance company sees that you have had these traits in your pursuit of a higher education, they will consider you less of a risk. It’s a fact that people that have higher levels of education have higher credit scores. Insurance companies are aware of this fact and set rates accordingly.

Credit and Profession

What you do for a living can tell your insurance company a lot about who you are. Not that all people in a particular field of employment are the same, but those who have good jobs typically make more money, thus they have better credit ratings. Again, your insurance company is looking at the big picture. All of these facts about you show your insurance company what type of an investment you are. Some professions that aren’t typically associated with a higher education, like police, fire or emergency service workers are also more favorable risks to insurance companies.

Other Ways to Save on Auto Insurance

The best way to get cheaper car insurance rates is completely within your power have and maintain a clean driving record. Your driving record has nothing at all to do with your credit score and it is something that you can keep clean by obeying the rules of the road and not being a habitual speeder.
Some other types of discounts are available, in addition to the clean driving record discount. Ask your insurance agents about which ones apply to you. A good credit score, while not the only way, is a great way to get lower insurance premiums.

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