Why would an insurance company check your credit?
Asked by: Stacy Kilback | Last update: September 22, 2025Score: 4.4/5 (10 votes)
Why do insurance companies check your credit?
Companies use credit in two ways, to underwrite and rate your insurance policy. Underwriting is the process where an insurer gathers information about you and decides whether or not they will insure you.
Is it illegal for insurance companies to check your credit score?
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.
Can you be denied insurance for bad credit?
In some states, yes, you could be denied coverage due to your credit. A very low insurance score might mean that a company considers you too great of a risk to insure, which could lead to the carrier denying coverage. However, some states do not allow this practice.
Why does credit score matter for insurance?
A credit-based insurance score allows insurers to quote the fairest, most appropriate rate for every customer. About half of our existing customers pay a lower premium based on their credit score.
Why Do Insurance Companies Check Credit? | Insurance Credit Checks Explained
Does having bad credit affect car insurance?
If you've ever applied for a credit card, leased a car or gotten a mortgage for a home, you know that credit scores count. You may be surprised to find out they can also affect your car insurance premiums much the same way your driving record, marital status and payment history can.
What information do insurance companies have access to?
An insurer can only access your medical records if you give your permission for them to do so. If you agree to let them go through your medical history, they'll contact your doctor and will look at your records over the last five to ten years.
Why did Geico check my credit?
Studies have shown that credit-based insurance scores have a strong correlation with the likelihood of filing a claim. When these scores are paired with other insurance factors, insurance companies are better able to determine an accurate personal rate based on the predicted risk.
What if I am too poor for car insurance?
If you can't afford car insurance, don't go without. Instead, try to find a more affordable policy by increasing your deductible, downgrading your coverage, looking for discounts, driving less and comparing prices from multiple insurance companies.
Can I get insurance without credit?
It is a common pricing factor because of its apparent accuracy in helping auto insurers predict risk. Your credit score won't be considered if you live in certain states (California, Hawaii, Maryland, or Massachusetts) because state law prohibits it.
Can I get car insurance with a 500 credit score?
While there's no set minimum score to get car insurance, you'll pay more if you have a lower score. Drivers with a credit score of 580 or below pay about 115% more for full coverage than the average driver with a credit score of 800 or above, according to Bankrate.
Can you get blacklisted by insurance companies?
We often hear from customers that they think they have been blacklisted by an insurance company. However, there is no such thing as a blacklist. You may, however, be registered with the CIS Foundation. People often refer to the database of Stichting CIS as the 'blacklist'.
Which credit score do insurance companies use?
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.
Why would a company check your credit score?
Many employers, especially when hiring for positions that include financial management, perform credit checks on job candidates before making employment offers. Employers may use credit report information to verify an applicant's identity and to look for signs of excessive debt or past financial mismanagement.
What is a no hit credit score?
However, they can use this to set your premium if they've given us data showing that people without credit histories are more likely to file a claim. Also, sometimes an insurer will find “no hits” or “no score.” This means they can't find a meaningful credit history for you.
What is a good credit score?
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
How much does bad credit affect car insurance?
On average, drivers with poor credit pay 113 percent more for full coverage car insurance than those with excellent credit. California, Hawaii, Massachusetts and Michigan prohibit or limit the use of credit as a rating factor in determining auto insurance rates.
What makes someone uninsurable for car insurance?
Poor driving history is a top reason drivers can face challenges obtaining auto insurance. A track record of collisions, traffic violations, or DUI convictions can make getting coverage difficult and extremely costly. Insurers consider drivers with such records high-risk; some may deny coverage altogether.
Who typically has the cheapest car insurance?
Geico, Nationwide and Travelers are among the least expensive for car insurance. Americans are paying a lot for car insurance these days: Average annual rates for a full coverage policy are up to $2,638 per year, while minimum coverage averages $767 per year.
Why do auto insurance companies check your credit?
Why do auto insurers check credit? Your credit history factors into your credit-based insurance score, which insurance companies use to help predict the likelihood of a future accident or claim. Note that certain states have laws that don't allow the use of credit information as part of car insurance pricing.
Why would Geico deny coverage?
Reasons Why Geico May Deny Your Car Accident Claim
If you do not have the right coverage in your insurance policy, Geico will not be able to cover your damages or medical expenses. Failure to Report the Accident: If you fail to report the accident to Geico on time, they may deny your claim.
Does Progressive run your credit?
Does Progressive check credit history when my policy renews? In states where it is allowed or required by law, we periodically review policies, including credit history.
Does unpaid car insurance go on your credit?
The short answer is no. There is no direct affect between car insurance and your credit, paying your insurance bill late or not at all could lead to debt collection reports. Debt collection reports do appear on your credit report (often for 7-10 years) and can be read by future lenders.
How do insurance companies track you?
How can insurance companies know that you're a safe driver? Usually, they rely on the information they collect from special equipment they install in the vehicle. They're known as insurance trackers or telematics.
What are insurance companies not allowed to ask you?
If you're applying for health insurance, pregnancy status or plans to have children shouldn't come into the conversation. Under the Affordable Care Act (ACA), pregnancy is considered a pre-existing condition, and insurers cannot deny coverage or charge higher premiums due to it.