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 insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Nov 7, 2020

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Key takeaways...

  • Your credit score is a huge factor in determining your car insurance rates
  • In the eyes of insurance companies, low or bad credit scores equate to a greater risk of filing a claim
  • Good credit does not translate to getting car insurance discounts — you are supposed to pay your bills on time
  • Do your research and shop around; you decide which company best serves your car insurance needs

Car insurance is a business designed around risk. Although, many drivers assume car insurance rates are based only on the type of vehicle and their driving record.

This assumption is very wrong as rates are based on many factors – one of them being a credit score.

If you’d like to not risk coverage on your car and rather get better and more affordable car insurance, enter your ZIP code above and compare at least three to four policies today!

How does a credit score relate to car insurance?

Since insurance is a risk-based industry, car insurance companies commission thousands of studies every year to further improve their profit model of risk.

A short while ago, car insurance companies noticed enough of a relationship between the chances of someone filing a claim and their credit score to add this factor to the car insurance premium formula.

Factors like where you live, how the vehicle will be used, how many drivers have access to the car, and more all play a small role in calculating car insurance premiums, but no topic has been so personal and debated as the use of credit scores in the car insurance industry.

Some states (such as California) have even banned the use of credit scores by car insurance companies, but they will most likely find another way around this as they always do.

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What if I file a claim?

The entire purpose of having car insurance coverage is to pay damages on your behalf in the event of a car accident. However, these are for-profit companies, and at the end of the day, no insurance company wants to pay out a claim.

Since drivers with low credit scores pose a greater risk of filing a claim, then auto insurance companies will choose to either (a) charge higher premiums or (b) deny coverage.

People with low credit scores or bad credit really need to shop around for car insurance.

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Many state programs exist for drivers who been denied coverage in the voluntary market. Sometimes you can be eligible for these programs by merely getting denied from a few of the major car insurance companies.

Applying for the state program might even help avoid companies who specialize in high-risk insurance (often charging much higher premiums) if you can become eligible.

Google terms like “Massachusetts Automobile Insurance Plan” (obviously replacing MA with your state), and make sure to link from an official government website to the particular state program for more information if you have been denied car insurance coverage.

Does good credit get me car insurance discounts?

Another hot topic. Car insurance companies generally do not offer discounts because you have good credit.

For people who feel entitled to discounts because they have good credit, remember — you are supposed to pay your bills on time!

Good credit is nothing more than something you should have.

Before car insurance companies used a credit report as part of calculating auto insurance premiums, the assumption of applicants paying their bills on time was already there.

The risk presented itself to people who were late, thus a correction to premiums.

Who has the best car insurance rates?

The answer to who has the best car insurance rates will depend entirely on who you speak with. Almost every driver’s profile is unique, and all have different ways to value what’s important to them outside of the policy itself.

Is online account management crucial? Would you pay more for 24/7 customer service? All kinds of questions can be asked, and no single company will still win the title of best car insurance company for all.

Take your time, learn about car insurance coverage, and compare car insurance companies. The best thing you can do is find the right provider for your needs without worrying about a title they hold in the marketplace.

Are you in the market for better and more affordable car insurance? Enter your ZIP code below and start comparison shopping today!


  1. https://www.forbes.com/sites/moneywisewomen/2013/01/08/what-really-goes-into-determining-your-insurance-rates/#260648103f85
  2. https://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm
  3. https://www.nolo.com/legal-encyclopedia/the-role-car-insurance-car-accident-case.html
  4. https://quotewizard.com/auto-insurance/13-reasons-your-car-insurance-claim-was-denied
  5. https://www.thebalance.com/what-is-a-high-risk-driver-527253
  6. https://wallethub.com/edu/types-of-car-insurance/9636/