Yes, in most states, and the number doing it is not the score your lender reads. Insurers compute a credit-based insurance score from the same three credit files, weighted to predict how often you will file a claim and how much that claim will cost, rather than whether you will repay a loan.
The practice is legal under federal law. The Fair Credit Reporting Act treats insurance underwriting as a permissible purpose for pulling a credit file at 15 U.S.C. § 1681b(a)(3)(C), and the pull is a soft inquiry that never costs a point. What it costs is the premium, and the premium is where an error you never noticed on your report turns into money every six months.
California, Hawaii, Massachusetts and Michigan ban credit in auto rating outright. Everywhere else the score moves a real number that the person it describes almost never sees, and the files it is computed from are not in good shape for everyone: 19.0% of scored consumers sat in the VantageScore subprime tier in December 2025, with another 17.9% in near-prime (VantageScore, 2025). State rules change, and your state insurance department publishes the current one.
A credit-based insurance score reads your file to answer a different question
It runs on the same inputs a FICO score runs on, payment history, balances, history length, new credit and credit mix, and then weights them for claims likelihood instead of default risk. The two numbers correlate and diverge, which is why a good FICO score does not guarantee a good insurance rate.
| Feature | Credit score (FICO) | Credit-based insurance score |
|---|---|---|
| Predicts | Whether you repay a loan | How often you file a claim and what it costs |
| Data source | Your credit file at one bureau | The same credit file |
| Heaviest factor | Payment history and utilization | Payment history, with account stability weighted heavily |
| Visible to you | Widely, through issuers and apps | Rarely; insurers seldom disclose the number |
| Type of pull | Hard inquiry on an application | Soft inquiry, no score effect |
The visibility row is the one that does the damage. A number you cannot look up is setting a price you pay every renewal. The file underneath it, at least, is fully readable and fully disputable, which is what our guide to reading your credit report walks you through.
Insurers read payment history, debt, history length and credit mix
Four categories do the work, and every one of them is something you can see on your own report before an insurer sees it.
- Payment history. Late payments, collections and charge-offs carry the most weight, the same way they do in a lending score.
- Outstanding debt. How much you owe across accounts, and how much of each limit you are using.
- Length of credit history. How long the file has existed and how long individual accounts have been open.
- Types of credit accounts. Whether the file holds a mix of cards, installment loans and other credit lines.
Nothing on that list is exotic, and nothing on it is hidden from you. An insurer reads the same four things you can read yourself, which is why an hour spent auditing the file before a renewal quote is an hour that pays.
Race, income, gender and marital status stay outside the score
The model is not permitted to take them as inputs, and the Federal Trade Commission tested whether the score smuggles them in anyway. Tested as a proxy for race and ethnicity, credit-based insurance scores carried a 1.1% effect for African Americans and a 0.7% effect for Hispanics, so almost none of their predictive power comes from standing in for group membership (FTC, 2007).
The distribution is a different matter, and the FTC was blunt about it. Of the 1.4 million policies in its database, 26% of African Americans fell in the lowest-scoring 10% of drivers against 3% in the highest, and average predicted risk rose 10% for African Americans once scores entered the model. Credit damage tracks job loss, medical events and divorce, so a score built on credit inherits whatever the file inherited.
That is an argument about the file, and it is the argument state legislatures keep reopening. For the driver holding the policy today, the file is the part within reach.
The FTC found the worst-scoring drivers cost nearly twice as much in liability payouts
Insurers paid out nearly twice as much on the property damage liability policies of drivers in the lowest-scoring 10% as they did on drivers in the highest-scoring 10%, measured across a database of 1.4 million auto policies (FTC, 2007). That correlation is why regulators have allowed the practice while fencing it in.
The same study drew the limit. Drivers in that lowest-scoring 10% still filed only 12 collision claims per hundred cars per year of coverage, and the FTC concluded that scores sort drivers into groups with different average risk and cannot predict the claims of any individual driver (FTC, 2007). You are priced as a member of a group your file put you in, and most of that group will never file anything.
Using credit lowers 59% of premiums and raises 41%, the FTC predicted
Premium money moves from higher-scoring drivers to lower-scoring ones, and the FTC modeled the split: 59% of consumers would see a decrease and 41% an increase, with a median increase of 16% against a median decrease of 13% (FTC, 2007). The increases run larger than the decreases, which is the part a driver with a damaged file feels.
A 16% median increase is not the ceiling. It is the midpoint, so half the drivers whose premiums rise pay more than that, and in a permissive state a clean-driving consumer with a damaged file can pay more than a poor driver with a pristine one.
That is the practical case for repairing a file beyond lending. The same correction that lowers an APR lowers a premium, and the premium is collected at every renewal rather than once at signing.
California, Hawaii, Massachusetts and Michigan ban credit in auto rating
Four states prohibit it for private passenger auto. A further group writes the limits into the insurance code instead of banning the practice, and Maryland, Oregon and Utah each bar an insurer from reaching for credit to cancel or refuse to renew a policy already in force.
| State | Rule on credit in auto rating | Where it is written |
|---|---|---|
| California | Credit is not an available rating factor. Proposition 103 puts driving safety record, annual miles and years of driving experience first, and lets an insurer add only the optional factors the commissioner has adopted by regulation. Credit is not one of them | Insurance Code § 1861.02(a); 10 CCR § 2632.5(d) |
| Hawaii | No insurer may base any standard or rating plan, in whole or in part, directly or indirectly, on a credit bureau rating | HRS § 431:10C-207 |
| Massachusetts | No credit information from a consumer report may be used in private passenger auto rating or underwriting | 211 CMR 79.04(13) |
| Michigan | An insurer may not use a credit score to establish or maintain rates or rating classifications for auto insurance | MCL 500.2162, added by 2019 Public Act 21 |
| Maryland | Credit may rate a new policy only. It may not raise a renewal premium, cancel or non-renew, the surcharge or discount is capped at 40%, and an insured rated down on credit gets a review every two years or on request | Insurance § 27-501(e-2) |
| Oregon | Credit may not cancel or non-renew a policy in force more than 60 days, and may decline an applicant only in combination with other substantive underwriting factors | ORS 746.661 |
| Utah | Credit may be used for initial underwriting alongside other risk factors, or to give a discount, and for nothing else: not renewal, not rating, not eligibility | Utah Code § 31A-22-320 |
Some state insurance codes also carry an exception for an extraordinary life circumstance, such as a death in the family, a divorce, a serious illness or identity theft, and the codes that carry one set their own documentation and filing rules. Your state insurance department is the authority on whether yours is one of them, because the provision sits in state law rather than in the federal baseline. The FTC’s consumer explainer on insurance scores covers the federal baseline that sits under all of it.
Section 1681m makes a credit-driven rate increase an adverse action
An insurer that raises your premium, declines you or refuses to renew because of credit information has taken an adverse action, and 15 U.S.C. § 1681m requires it to tell you. The notice names the bureau that supplied the file, and § 1681m(a)(2) requires the numerical score the insurer used, the range that score sits in, and up to four key factors that dragged it down. Section 1681j(b) then gives you a free copy of that report within 60 days.
Insurance adverse action notices are easy to miss because they arrive looking like rate-change boilerplate. The score and the four factors are printed on the same page, and those four factors are a dispute list written for you by the company charging you more.
Pull the report the notice entitles you to, because what sits on it is frequently somebody else’s. Our own reading of the public complaint record points at what to check first. Two thirds of the complaints recorded in the CFPB’s public Consumer Complaint Database between July 2025 and June 2026 about incorrect information on a credit report said the information belongs to someone else: 66.9% of 3,482,718. These are unverified consumer allegations. That failure has a name and a fix, and we cover it in our guide to mixed credit files, alongside the step-by-step in how to dispute a credit report error and your right to a free credit report.
The FTC modeled a no-hit file as 1.06 times riskier than a scored one
Having no score is not neutral. Where a credit-based insurance score could not be generated, the FTC found no-hit consumers modeled as 1.06 times riskier and thin-file consumers as 1.02 times riskier than they looked in a model that used no scores at all (FTC, 2007). A blank file reads to an insurer as a mild warning.
The population this describes is smaller than it used to be and still real. The CFPB corrected its own credit-invisibles estimate in 2025 and put the December 2020 credit-invisible share at 2.7% of 258 million US adults, roughly 7.0 million people, with a larger group holding a record too thin to score (CFPB, 2025). Our guide to what a thin credit file is covers the way out of that category.
Errors price a premium exactly the way real debt does
An insurance score cannot tell a real late payment from a clerical one, so a file error is priced at face value. In the FTC’s congressionally mandated accuracy study, one in five consumers had an error on at least one of their three credit reports, and for 5% the error was serious enough that it could raise the price they pay for credit or insurance (FTC, 2013).
That second figure is the one to sit with. The study named insurance alongside credit, which means the cost of an unchallenged error was never only an interest rate. It has been a premium the entire time, charged quietly, every renewal, to people who assumed their driving record was doing the pricing.
Skip the paperwork. Start your dispute.
CreditRefresh drafts your FCRA dispute letter and tracks the 30-day investigation window. You review, approve, and send. You stay in control.
Get StartedShop, dispute and requote to cut the credit share of your premium
Five steps, and the first one costs nothing but an evening.
- Shop several insurers. Each weighs credit differently and some weigh it barely at all, so the spread between quotes on identical coverage is often hundreds of dollars.
- Audit all three credit files and dispute what is wrong. Equifax, Experian and TransUnion generally have about 30 days to investigate under the FCRA.
- Ask for the extraordinary life circumstance exception in writing where your state provides one, with the documentation attached.
- Work the file itself. On-time payments and falling balances move an insurance score the same direction they move a credit score, which is the program in our guide to improving your credit.
- Requote at every renewal after the file improves. The discount is not volunteered, and a credit-based insurance score recomputes only when someone pulls the file again.
Step five is the one drivers skip. The correction lands on the report, the file improves, and the policy keeps billing the old number until a fresh quote asks for a fresh score. Quoting costs a soft inquiry, which is to say nothing at all, as our guide to soft versus hard inquiries explains.
Your insurer reads three reports you are allowed to read first
The insurance score is invisible, the file underneath it is not, and only one of those two things is worth arguing with. Outside California, Hawaii, Massachusetts and Michigan the file is doing part of the pricing whether or not anyone tells you, and the FTC put the median increase for drivers on the wrong side of it at 16%.
So read the file before the renewal, not after the notice. An error that raises what you pay on a car loan has been raising what you pay on the policy too, and one dispute challenges the item behind both.
Compare tools for checking the report behind your insurance score
An insurance quote can send you back to a file you haven’t read in years. Our September 18, 2026 data shows that paying CreditRefresh members had 30 negative bureau entries on average. Some may be accurate, and the same debt can appear more than once. Look at which reports each tool checks and what help you get if an entry is wrong.
| Tool | What you pay | What that buys | Bureaus | Trustpilot |
|---|---|---|---|---|
| CreditRefresh | $49.99/mo, no setup fee, cancel anytime. Mail letters yourself free, or pay RushMail per letter | Checks all three reports and drafts a letter for each entry you choose to dispute. You review and sign it, then follow the reports through ongoing monitoring | All three | 4.3 (9 reviews) |
| Dispute Beast | From $49.99/mo for required monitoring. Mail letters yourself free, or pay Sprint Mail per letter | Drafts across all three reports too, but the dispute tool itself is free only bundled with its paid monitoring. Mail letters yourself free, or pay Sprint Mail per letter | All three | 4.2 (2,067 reviews) |
| DisputeBee | $49/mo personal, $129/mo business | Templates and a suggester across all three; you print, mail, and log every bureau’s reply back against your insurance file yourself | All three | 3.2 (68 reviews) |
| The Credit People | $99/mo standard, $119/mo premium, or $599 for 6 months | A firm challenges all three reports for you, but you never see the letter that is supposedly fixing what your insurer reads | All three | 1.7 (17 reviews) |
| Lexington Law | $139.95/mo, invoiced at the end of each service period | A law firm works all three bureaus with no self-serve view of what it sends on your behalf | All three | 3.2 (624 reviews) |
| Credit Karma | Free, paid for by lender referrals | Flags what looks wrong but disputes only TransUnion, one of the three reports an insurer may actually be pricing from | TransUnion | 1.1 (912 reviews) |
Every price is that company’s own published rate, read off that company’s own site on September 15, 2026. Trustpilot scores and review counts as published on September 24, 2026.
A monthly fee pays for work on your file, so it helps to know what that work includes. Manuel G., 2 star, September 9, 2026, on Lexington Law: “on six months they only clean one collection out of 10 ,the other collections started falling off by themselves because the 7 mark period”. You can use the tools above to work on a wrong entry and check later reports. Your insurer still sets the policy price; a review of a credit service cannot tell you what your next quote will be.
Old entries can also age off under 15 U.S.C. § 1681c. Keep the dates in view as you compare services.
Check a wrong credit entry before your next insurance renewal with CreditRefresh
If a credit report error turns up while you’re shopping for car insurance, you have a clear place to start. CreditRefresh scans all three bureau reports and drafts a dispute for each item you choose to challenge. That might be a debt you don’t owe or a late payment your records show was on time. You read and sign every letter, with your own records beside you.
Ongoing monitoring lets you check what later reports show. In our paying-member data, 47.9% of disputed items with a recorded outcome no longer appeared on a later report from the same bureau. Outcomes were recorded for 2.3% of items in mailed rounds in our September 18, 2026 data, across all dispute types. You can check your own reports again when it is time to shop for a policy.
Becca, a 5-star Trustpilot review, July 25, 2026: “it instantly pulled up my reports and flagged the things that were bringing down my credit score so that I could review and address those problem areas”. Jean L., a 5-star Trustpilot review, August 24, 2026: “I was pleasantly surprised at how quickly and efficiently CreditRefresh.ai was able to analyze my reports and make immediate recommendations to help me along this credit repair journey”.
Refresh Monitoring includes CreditRefresh for $49.99 a month, with no setup fee, no per-dispute charge and no contract. You can cancel any time. It gives you a way to work on a wrong entry while you rebuild credit and compare policy quotes.
It is backed by our 100% money-back guarantee: members who work the full program and see no bureau score rise above where they started can claim back every Refresh Monitoring payment. It is a refund promise, never a score promise.
Frequently asked questions
Does getting an insurance quote hurt your credit score?
No. Insurers pull with a soft inquiry, which lenders never see and which costs no points. You can quote every insurer in your state and leave your score exactly where it started.
Can you be denied car insurance due to your credit history?
In a state that permits credit-based insurance scoring, yes, and the denial is an adverse action that triggers written notice under FCRA Section 615. Several permissive states still fence it: Utah bars credit from deciding eligibility at all under Utah Code § 31A-22-320, and Oregon allows it on an initial decline only in combination with other substantive underwriting factors under ORS 746.661. Ask your state insurance department which rule applies where you live.
Does GEICO go by credit score?
In the states that permit credit-based insurance scoring, any national carrier may use one, GEICO included, and none may in California, Hawaii, Massachusetts or Michigan. The carrier does not settle that question, the state does, and the rate filings your state insurance department publishes say which factors a carrier uses there.
Does paying car insurance premiums build credit?
No. Premiums are not a credit obligation and insurers do not furnish payment data to Equifax, Experian or TransUnion. An unpaid premium balance sent to collections can still land on the report, which is the usual one-way deal with bills that report only when they go bad.
Can an insurer cancel a policy because of credit?
State rules vary, and the pattern in the states that permit scoring is to fence the back end harder than the front. Oregon bars a cancellation or non-renewal on credit once a policy has been in force more than 60 days (ORS 746.661), and Maryland bars a credit-driven renewal increase outright (Insurance § 27-501(e-2)), while both allow credit at the point of issue. Your state insurance department publishes the controlling rule and takes complaints about it.
Does credit affect home and renters insurance too?
In permissive states, yes, through the same credit-based insurance scoring. The federal study that measured the effect of credit-based scores, the FTC’s 2007 report to Congress, examined automobile policies only, so there is no comparable federal measurement of the homeowners spread to put beside it. The same audit, dispute and requote sequence applies to those policies.
How fast does an improved credit file show up in a premium?
At the next quote or renewal that pulls fresh credit data, because an insurance score recomputes only when someone asks for it. A few states force the issue: Maryland requires an insurer that rated you down on credit to review the file every two years or on request and adjust the premium for any improvement (Insurance § 27-501(e-2)). Everywhere else, asking for a requote is what triggers it.
Last reviewed: September 2026
This article is for educational purposes only and does not constitute legal or financial advice. The Fair Credit Reporting Act and related regulations are complex, and outcomes depend on individual circumstances. Consumers with specific questions about their credit reports or rights under federal law should consult a licensed attorney or contact the Consumer Financial Protection Bureau directly.
CreditRefresh reads your three credit reports the way an insurer does and drafts the challenge for what does not belong there, before the next renewal prices it. Connecting your reports takes a few minutes, and the first scan is ready the same day. Backed by a 100% money-back guarantee.
