Credit and your car insurance rate

It isn't your credit score

A credit-based insurance score is a separate model built from credit report information and designed to correlate with insurance claims, not with loan repayment.

It weights things differently from a lending score. Someone with a strong lending score can have a mediocre insurance score, and the reverse happens too.

Where it isn't used

Several states prohibit or heavily restrict the use of credit information in auto insurance rating — California, Hawaii and Massachusetts among them — and others limit how it may be applied.

The rules change, so check with your own state insurance department rather than relying on any published list, including this one.

What tends to feed into it

• Payment history
• Outstanding balances relative to limits
• Length of credit history
• Recent applications for new credit
• Accounts in collections, and public records where used

What to do if it's hurting you

• Shop widely — insurers weight this factor very differently, and some barely use it
• Check your credit reports for errors; you're entitled to free copies and errors are common
• Ask your insurer whether they will re-rate you if your credit improves, and how often
• Ask about an extraordinary life circumstances exception — many states require insurers to consider events such as serious illness, divorce, or job loss on request
• Look at usage-based programmes, which put weight on how you actually drive

The exception worth asking about specifically

The extraordinary life circumstances provision is the least known and most useful. Where it applies, an insurer must consider an exception when specified events have affected your credit.

It generally has to be requested, in writing, with documentation. Nobody will offer it to you.