Several states restrict or ban the use of credit-based insurance scores for determining insurance rates, with California, Hawaii, Massachusetts, and Michigan leading with the strictest prohibitions. Maryland, Oregon, and Utah also have significant restrictions or bans on using credit history for certain insurance underwriting or pricing decisions.
While the vast majority of insurance companies use credit-based insurance scores to help determine the price of insurance, it is banned in the states of Massachusetts, Michigan, Hawaii, and California. Some states only allow it as a factor for property insurance like auto and homeowners insurance.
FICO estimates approximately 95% of auto insurers and 85% of homeowners' insurers use credit-based insurance scores in states where it is a legally allowed underwriting or risk classification factor. Insurers use credit-based insurance scores primarily in underwriting and rating of consumers.
Yes. A federal law, the Fair Credit Reporting Act (FCRA), states insurance companies have a “permissible purpose” to look at your credit information without your permission.
California
Insurance companies in California don't use credit-based scores or your credit history for underwriting or rating auto policies, or setting rates for homeowners insurance. As a result, your credit won't impact your ability to get or renew a policy, or how much you pay in premiums.
Which insurance companies don't use credit scores? Most major car insurance companies like GEICO, Progressive and State Farm factor in your credit score when giving you a quote. Some smaller, regional insurers skip credit checks, though their coverage options (and available online information) can be limited.
Texas law allows insurance companies to use insurance credit scores, but mandates that the Texas insurance commissioner regulate their use. Texas rules regarding the use of insurance credit scores are among the strongest in the country.
Michigan law prohibits insurance companies from using non-driving factors such as gender, credit score, ZIP code, occupation, or education level to affect car insurance rates when calculating premiums. However, insurers may still use certain geographic or behavioral data that indirectly reflect these factors.
Root, Metromile, and Mercury Insurance are the best car insurance companies that don't use LexisNexis. Root is the cheapest company that doesn't use LexisNexis. Rates start at $16/month. However, Root and Metromile are only available to low-mileage drivers.
Yes, USAA insurance does use your credit score as a factor when determining your car insurance rates, as do most major insurers. However, credit checks by auto insurers do not harm your credit score and are only done in states where it is legal for your credit score to affect your rates.
State and federal laws allow insurance companies to look at your credit history. If you don't get the best rate possible due to your credit information, your insurance company must tell you in writing and explain why. They can list up to four reasons why you didn't get the best score.
Japan, the Netherlands, and Spain rely on factors like one's income, repayment history, and length of employment to determine creditworthiness.
For most people, increasing a credit score by 100 points in a month isn't going to happen. But if you pay your bills on time, eliminate your consumer debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
According to a survey by Conning and Co., over 92% of all major insurers, including GEICO, use credit-based insurance scores to help determine insurance premiums in most states. In many cases, this information helps lower the cost of insurance.
Non-traditional uses of credit scores
Starting in the 1990s, the national credit reporting agencies that generate credit scores have also been generating more specialized insurance scores, which insurance companies then use to rate the insurance risk of potential customers.
Your State Farm insurance likely went up due to industry-wide factors like inflation, higher repair/rebuilding costs (parts, labor), more frequent severe weather claims, and increased accident frequency, impacting both auto and home policies. Specific reasons include expensive new car tech, EV costs, distracted driving, and general economic trends pushing up replacement costs for everything from car parts to home materials, making claims more expensive for State Farm to cover.