Last Updated August 2025
- Maintaining a high credit score, which insurers can use to develop a credit-based insurance score, may help you save on premiums.
- Your credit-based insurance score could be one of many factors used to calculate your premium.
- Most states have laws governing how insurance companies can use your credit-based insurance score in calculating your insurance premium.
Your credit history matters, but it is only one of many factors used in calculating your premium. In most states, insurers can use your credit history to develop something called a “credit-based insurance score,” or “insurance score,” which may be used in setting premiums. Studies show that using this score can help insurers better predict insurance losses. Customers with high credit-based insurance scores tend to pay less for car insurance than those with low credit scores.
Credit scores and credit-based insurance scores are related but different. Your credit score, or FICO score, reflects your income, gender, credit history and age among a broad range of personal information and aims to measure the likelihood that you’ll pay back a loan. It’s widely used by mortgage companies and other lenders.
A credit-based insurance score is based in whole or in part on a person’s credit information. Credit-based insurance scores use certain elements of a person's credit history to predict how likely they are to have an insurance loss.
In many states, insurers also take into consideration criteria such as your mileage, driving record, age and location in setting premiums. Learn more about insurance in your state, including required liability minimums, auto insurance discounts and the average cost of coverage.
What’s the difference between a credit score and credit-based insurance score?
Credit scores and credit-based insurance scores are related but different. Your credit score, or FICO score, reflects your income, gender, credit history and age among a broad range of personal information and aims to measure the likelihood that you’ll pay back a loan. It’s widely used by mortgage companies and other lenders.
A credit-based insurance score is based in whole or in part on a person’s credit information. Credit-based insurance scores use certain elements of a person's credit history to predict how likely they are to have an insurance loss.
In many states, insurers also take into consideration criteria such as your mileage, driving record, age and location in setting premiums. Learn more about insurance in your state, including required liability minimums, auto insurance discounts and the average cost of coverage.
The information contained in this page is provided for general informational purposes only. The information is provided by Farmers® and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.
Related articles
