How Your Credit Score Affects Your Auto Insurance Premiums

Companies and Brands

Published: July 13, 2017 9:45 am

Last Updated: January 12, 2020 10:11 am

Every state except New Hampshire requires you maintain auto insurance coverage in order to drive. The monthly premium you pay for that insurance depends on more than just your driving record. One little-known data point that can affect your auto insurance premium is your credit score.

On average, Americans who have no credit pay 65% more for auto insurance than those who have excellent credit (a credit score of 800 or more). In three states — Pennsylvania, New Jersey and Michigan — auto insurance premiums for drivers with no credit are at least double the premiums paid by drivers with excellent credit. In two other states — Oregon and Colorado — drivers with no credit pay 99% more.

The data were compiled by researchers at WalletHub who compared the cost of policies from five of the country’s largest auto insurance companies for a pair of hypothetical applicants who are identical except for their credit standing: One has excellent credit and the other has no credit.

The five insurers included in the study were GEICO, Progressive, State Farm, Allstate and Farmers. Here are three key findings from the research:

Farmers Insurance seems most reliant on credit data, with credit newcomers paying over twice as much as excellent-credit customers. Even GEICO (least reliant) has a 40% penalty.

The five major auto insurance companies use credit data in 90% of the states in which they operate, on average. Only Progressive uses credit data in all of the states it serves.

Travelers is the most transparent about its use of credit data, providing a clear disclosure when generating quotes.

And how much can you save, on average, from each company if you have excellent credit? Here’s the league table:

GEICO: 29%
Progressive: 35%
State Farm: 37%
Allstate: 44%
Farmers: 50%

More details and full methodology for the study are available at the WalletHub website.

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