Which insurance companies don’t use credit scores?

A woman stands near a window in her home while using a smartphone to read about auto insurance companies that do not use credit scores.Image: A woman stands near a window in her home while using a smartphone to read about auto insurance companies that do not use credit scores.

In a Nutshell

Most insurance companies use credit scores to set rates and approve or renew auto policies. But this doesn’t mean you’re completely out of luck if you don’t have good credit.
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Your car insurance rates depend on various factors — your age, location, and in some cases, your credit scores.

Insurance companies claim that drivers with lower credit scores are considered higher risk because certain studies indicate a connection between how a person manages their finances and how likely they are to file an insurance claim. Taking a person’s credit scores into account when setting rates is part of how the insurance company matches policy premiums with the risk that a customer might pose.

Insurance companies don’t look at the same credit scores that lenders use to approve you for a mortgage or auto loan. Instead, they use a particular industry-specific insurance score calculated from information on your credit reports.



Why do car insurance companies pull your credit?

Car insurance companies pull your credit-based insurance score and use it — along with other factors — to help assess risk and price your policy.

The Fair Isaac Corporation, creator of the commonly used FICO® credit-scoring model, introduced insurance scores in the early 1990s. Today, FICO estimates that 95% of companies that offer personal lines of insurance coverage use credit-based insurance scores to evaluate a customer’s risk — when allowed by state law.

While some credit pulls can lower your credit scores, this type of credit inquiry doesn’t. It’s considered a soft credit inquiry, similar to the credit pulls that occur when a company checks your credit to see if you qualify for a financial product like a credit card or loan. It might appear on your credit reports, but it doesn’t affect your scores.

Types of auto insurance that may not require a credit pull

Most auto insurance companies will check your credit-based insurance score as part of the underwriting process, if you live in a state that allows it.

But some will provide auto insurance without a credit check because they base your car insurance premiums on other factors.

Usage-based car insurance

Usage-based insurance policies base your premiums on how many miles you drive and your driving behavior rather than establishing an annual or semi-annual fixed rate.

These companies typically install a device on your vehicle that tracks …

  • How many miles you drive
  • When and where you go
  • How fast you drive
  • Whether you drive aggressively (rapidly accelerating, hard braking and cornering, etc.)
  • Whether you’re involved in an accident that results in your airbag being deployed

Some insurance companies with usage-based policies will also check your credit as part of the underwriting process. And then they use telematics to collect information about your driving habits and potentially offer a discount for safe driving.

Before applying for one of these policies, make sure you understand what information the insurance company will collect and how it may be used, so you can find a program that’s a good fit for your situation.

Keep in mind that going with an insurer that doesn’t check credit doesn’t necessarily mean you’ll pay a lower rate than you would with a company that checks credit. If you drive long distances regularly, or if you often drive at certain times (especially late at night), you could pay more.

How much do credit scores affect car insurance rates?

Though your credit health can affect how much you pay for car insurance, insurance companies are generally not allowed to base approvals and rates solely on your credit scores.

Here are some other factors they consider.

  • Your driving record
  • Your location
  • Your age, gender, and marital status
  • The type of vehicle you drive
  • Any discounts you may qualify for, such as those available for bundling home and auto insurance, being a safe driver or signing up for automatic payments

Which states don’t allow credit checks for auto insurance rates?

Currently, five states ban or limit insurance companies’ use of credit scores for setting policy rates. Those states are California, Hawaii, Maryland, Massachusetts and Michigan. But more states could take a similar approach soon.

There’s a bill moving through the Washington State Legislature that would prohibit the use of credit scores in insurance pricing. Oregon and Utah have taken a different approach and don’t allow insurance companies to cancel or refuse to renew coverage based on the policyholder’s credit — though it can be used when underwriting a new policy.

Auto insurance companies that don’t check credit scores

Not many insurance companies offer auto insurance policies without running some form of credit inquiry but here are a few to consider if you’re searching for a company that doesn’t check credit.

Cure Auto Insurance

Cure, which stands for Citizens United Reciprocal Exchange, is a nonprofit insurance carrier that bases rates on customers’ driving records. The company currently offers auto insurance in three states: Michigan, New Jersey and Pennsylvania.

Dillo Insurance

In Texas, Dillo Insurance provides auto insurance policies to customers with tickets, accidents, lapses in coverage or no prior coverage without checking credit.

Empower Insurance

Empower Insurance offers several car insurance options, some of which don’t use credit when calculating premiums. Empower is also only available in Texas.

Tips on how to raise your credit scores

Working with an insurance company that doesn’t require a credit check won’t necessarily mean saving on your auto insurance rates. You might pay less in the long run by working to increase your credit scores. Here are some tips.

  • Review your credit report. Order free copies of your credit report from each of the three major credit bureaus at AnnualCreditReport.com and review them for errors. Common errors — incorrect reporting or the same debt appearing more than once — can lower your scores. Follow each agency’s instructions for disputing errors on your credit report, and you may see a change in your scores within a few months.
  • Pay your bills on time. Your payment history significantly affects your credit scores, making up 35% of the FICO scoring model. If you’ve struggled to pay your bills on time in the past, consider setting up automatic payments or calendar alerts to avoid late payments.
  • Keep your credit utilization low. Ideally, you should keep your credit card utilization rate — the percentage of your available credit you’re currently using — below 30%. If you’re carrying more debt than that on any one card or all your revolving accounts combined, try paying down those balances or asking your credit card company for a credit limit increase.

What’s next?

If you need car insurance and don’t have a great credit-based insurance score, don’t panic. Credit is only one of many factors insurance companies use to determine how much you’ll pay.

Shop around with a few different companies to compare rates and coverages. If you have a clean driving record, you might find that you qualify for affordable car insurance despite your credit concerns.


About the author: Janet Berry-Johnson is a freelance writer with a background in accounting and insurance. She has a bachelor’s degree in accounting from Morrison University. Her writing has appeared in Capitalist Review, Chase News &a… Read more.