Do all insurance companies check credit?

No, not all insurance companies check your credit, and the practice depends heavily on your location and the type of insurance.

When and Why Credit is Checked

• Credit-based insurance scores: In most states, about 95% of personal auto insurers and 85% of homeowners insurers use a specialized credit-based insurance score to help assess risk and set rates.
• Soft inquiry: When an insurance company checks this score, it is a soft inquiry. It does not hurt or lower your credit score.
• State bans: Several states prohibit or strictly limit insurance companies from using credit scores to determine rates or make underwriting decisions. These states include California, Hawaii, Massachusetts, and Michigan (and partially restricted or regulated in states like Oregon, Utah, and Maryland).

Exceptions and Alternatives

• No-credit-check companies: A few regional or specialty companies (such as CURE Auto Insurance or Dillo Insurance) do not use credit checks to determine pricing.
• Alternative products: Certain types of coverage, such as some usage-based insurance programs, rely primarily on your driving habits rather than your financial history.
• Official guidance: You can learn more about how financial metrics affect your policy via your state's department of insurance or resources like the Texas Department of Insurance.

Most major insurance companies check your credit to calculate rates, but specific regional providers like CURE Auto Insurance and Dillo Insurance do not.

Companies That Skip Credit Checks

• CURE Auto Insurance: Available in New Jersey, Pennsylvania, and Michigan. It bases rates purely on your driving record rather than your credit or occupation scores.
• Dillo Insurance: Available exclusively in Texas.
• Glacier Auto Insurance: Available in select areas like Pennsylvania and Delaware.

States That Ban Credit Checks

If you live in certain states, state law completely prohibits auto insurance companies from using your credit score or credit history to calculate your rates:

• California
• Hawaii
• Massachusetts
• Michigan
• Maryland, Oregon, and Utah also enforce heavy partial restrictions or bans on how credit can be used.

Important Details to Know

• Soft Inquiries Only: When major insurers (like GEICO, Progressive, or State Farm) check your credit for a quote, they perform a soft pull. This does not harm your credit score.
• Alternative Options: If you have poor credit and live outside these specific states or coverage zones, look into usage-based or telematics insurance (like Nationwide's SmartRide), which bases your rate on your actual driving habits rather than your financial history.

Yes, it is very normal for insurance companies to check your credit when you apply for auto, home, or other personal policies.

How and Why Insurers Check Credit

• Credit-based insurance scores: Insurers use a special score based on your credit report, not your standard financial credit score.
• Assessing risk: Companies use this score to guess how likely you are to file a claim. Studies show that people with lower scores tend to file more expensive claims.
• Soft inquiries: This check is a soft credit inquiry. It does not hurt or lower your credit score.

State Rules and Restrictions

• Allowed in most states: Insurance companies can legally check your credit in a majority of states.
• Banned in some states: A few states—such as California, Hawaii, Massachusetts, and others—restrict or completely ban the use of credit scores for setting insurance rates.

Yes, you can be denied car insurance due to your credit history in some states, though many states restrict or prohibit this practice.

Rules by State

• Prohibited: States like California, Massachusetts, and Hawaii completely ban companies from using credit scores to set auto insurance rates or make underwriting decisions.
• Restricted: States like Michigan, Maryland, and Oregon limit when or how credit history can be used to deny, cancel, or price policies.
• Allowed: In most other states, insurance companies use a credit-based insurance score to decide if they will offer you coverage and how much to charge you.

How Credit Affects Coverage

• Higher Rates: Poor credit more often results in much higher monthly payments rather than a total denial of service.
• Risk Evaluation: Insurers look at your credit history because data shows a link between financial distress and a higher likelihood of filing claims.
• Adverse Action: If an insurer denies coverage or charges a higher rate because of your credit report, the Fair Credit Reporting Act requires them to send you a written notice and provide a free copy of the credit report used.

A few states completely ban or severely restrict insurance companies from using credit scores to set or calculate insurance rates.

States with Complete or Strict Bans

• California: Bans credit-based insurance scores for both auto and home insurance.
• Hawaii: Prohibits credit scoring for auto insurance pricing, though it is allowed for some other insurance types.
• Maryland: Prohibits using credit history to price or make coverage decisions for homeowners insurance.
• Massachusetts: Completely forbids using credit information for both auto and homeowners insurance rates and underwriting.
• Michigan: Prohibits insurers from using credit scores to set auto insurance rates or deny/cancel auto and home policies.
• New York: Does not allow insurers to use credit information when setting auto insurance rates.

States with Partial Restrictions

• Oregon: Allows credit scoring for initial auto quotes, but forbids raising rates at renewal or canceling policies based on credit.
• Utah: Restricts credit use primarily to initial underwriting and offering positive discounts rather than penalty rate hikes.

You can learn more about these rules and how credit affects pricing via the Experian Guide on Insurance Scores or review options for providers through Credit Karma's Insurance Overview.