June 19th, 2012

What’s Up With My Auto Insurance Score?

212 Comments | Twitter | |


auto insurance score

There’s a lot of confusion surrounding auto insurance scores, and it’s understandable. Why would your insurance premiums be based on your credit history, something that’s completely unrelated to your driving history? Today we’ll try our best to clear up the confusion.

What is an auto insurance score?

The auto insurance score—also called a credit-based insurance score—is a three-digit number meant to predict the likelihood that you’ll file an insurance claim. The auto insurance score you receive on Credit Karma ranges from 150 to 950, and it’s calculated using data from your TransUnion credit report. However, it is not the same thing as a credit score. Also, it has nothing to do with your driving record.

As these scores came into wide use, the National Conference of Insurance Legislators (NCOIL) Model Act started regulating the use of credit information by insurers in 2007.

Who uses it?

These scores have become more prevalent in the past several years. They’re used by the 15 largest auto insurers, including Allstate, GEICO, Nationwide, Progressive, StateFarm and USAA. The scores can vary from company to company, as different factors are used and weighted in their creation.

How does my credit affect my insurance rates?

While most auto insurers use credit information to help set your premium, they also use other factors, including your driving record and market demographics. In fact, the NCOIL Model Act prohibits insurers from amending or setting your rates based solely on your credit profile.

For instance, if you currently have a good insurance premium, you shouldn’t worry about your insurance costs suddenly skyrocketing due to a recent credit blunder. That’s restricted by the NCOIL Model Act.

It’s also important to note that these scores are not used to predict whether or not you’ll pay your premium; they’re meant to predict whether or not you’ll file an insurance claim. In other words, they attempt to estimate future losses to the insurance company instead of your future payment behavior.

The good news is that you can benefit from a good insurance score coupled with a good driving record. You could qualify for a lower rate than you would get based solely on your driving record.

Are insurance scores fair?

It might seem strange that your credit history can be used at all in setting insurance premiums, but there are reports to back it up. A 2007 FTC study found that these insurance scores are effective predictors of risk.

However, there are opponents to the credit-based insurance score. One 2005 study suggests that this method of setting insurance premiums “has a disproportionate impact on consumers in poor and minority communities.”

What if I don’t want my insurance company using my credit?

Whether or not this practice is fair is still up for debate. But the Fair Credit Reporting Act allows for the use of credit information by insurance companies.

If you’re worried about your credit negatively affecting your insurance rates, check with your insurance company to see if it uses credit information. Most large, countrywide companies do, but you may find a smaller, regional insurance provider that doesn’t.

Bottom Line:

If you’re already with an insurance company that uses credit to help set premiums, know that your rate won’t change because your insurer suddenly decides to recheck your credit. In fact, if an insurance company denies you coverage or increases your rates based on information in your credit report, you have rights. Read this American Insurance Association brochure for more information. It’s also important to remember that you could receive lower rates if you have a good insurance score and great driving record.

Have more questions? Find out if they’ve already been answered in our Credit Advice Center.

is the Social Media Manager and Writer at Credit Karma.

Follow Credit Karma!

Facebook: http://www.facebook.com/CreditKarma

Twitter: http://twitter.com/creditkarma

YouTube: http://www.youtube.com/creditkarma

Subscribe to the Credit Karma Blog


Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.


  1. Thank you CreditKarma,

    Richard McGinnis at 5:00 pm on October 12, 2014
  2. Companies must file their insurance credit scoring models with TDI. To request a copy of a company’s insurance credit scoring model, please submit an open records request to the Texas Department of Insurance.

    Clint at 6:08 pm on October 27, 2014
  3. Look closely and you’ll find some enlightening information on how and why each credit factor is used to develop insurance scores.


    Greg A at 3:17 pm on November 15, 2014
  4. Charmaine

    Thanks for sharing, Greg!

    Charmaine at 9:41 am on November 17, 2014
  5. You know what else gets me about these insurance scores both auto and home is the fact that my fico score has continued to go up and I have gone from very poor about five years ago to just under good. I have been diligently working on it, but my insurance scores are very poor. I have never missed a payment on either and I have had both auto and home owners insurance since 1970. And both seem to eek up a couple of dollars each year. I moved closer to Detroit about 7 years ago and there went the rates. In a matter of 7 years my monthly rate went up $80 dollars inclusively even though I have trimmed the coverage back and raised my deductibles. I have checked around to no avail. I am getting the best rate around. One of the funny things is one of the excuses for my rate being higher was that I was too close to Detroit, yet my car was stolen 10 years ago when I lived in a farming community. Go figure!!!

    Bernadette at 1:02 pm on January 23, 2015
  6. Start writing to your state representatives and get your family members and neighbors to do so too!! Raise heck with them. Write once a week if you can!! This must be addressed because it is the middle class being robbed legally with this scam!!!

    Tom at 10:34 am on January 26, 2015
  7. All I want to know is what Insurance company’s do not use credit scoring! it’s proving vary difficult top find any!

    Larry at 5:27 am on March 8, 2015
  8. insurance provider has a unique policy and therefore different rates.

    Nitish Chauhan at 9:03 am on July 22, 2015
  9. do inquiries from insurance companies lower my credit score?

    John W at 11:09 am on January 4, 2016
  10. Enola Guerrero

    Hi John – Since that depends on the lender and bureau, check out the following article to learn more about hard inquiries, https://www.creditkarma.com/article/hard_inquiries_and_soft_inquiries


    Enola Guerrero at 5:16 pm on January 5, 2016
  11. Thanks for another informative site. The place else could I am getting that
    kind of information written in such a perfect method?
    I have a challenge that I’m just now running on, and I’ve been on the
    glance out for such information.

    Reda at 7:39 am on February 2, 2016

Enter your comment