Your Low Credit Score Means Higher Car Insurance Payments in These States

A 1995 crash test in Germany.
A 1995 crash test in Germany.
Photo: AP

Car insurance should be simple. If you are a safe driver you should pay less than someone who is more accident prone. But we all know that isn’t how it works. A multitude of other factors also determine your rates, including your credit score. A recent study shows that depending on where you live and who your insurance company is your credit can have a big impact.

Advertisement recently conducted a study to figure out which exactly how your credit data affects your premium in all 50 states and which major insurance carriers but a bigger weight on those scores than others.

There is a ton of excellent data, that you should check out but here are some of the highlights of the findings, noting that you’re going to get hit hardest in New Jersey, then the home of don’t-get-caught-speeding, Virginia:

Illustration for article titled Your Low Credit Score Means Higher Car Insurance Payments in These States

Really, it’s bad in New Jersey, where drivers with no credit pay “at least twice as much” as drivers with excellent credit, in comparison to the average of 67 percent, generally.

If your credit isn’t great for, whatever reason, you may want to rethink your carrier, particularly if you’re with Farmers. Geico people may be breathing a sigh of relief at this point:

Illustration for article titled Your Low Credit Score Means Higher Car Insurance Payments in These States

The methodology for the study was pretty straightforward, with the site obtaining two quotes, one from someone with good credit, one from someone with bad credit, and saw how the two differed:

In order to determine the impact of consumer credit data on car insurance premiums, we collected premium quotes from the websites of five of the largest insurance providers in the United States, based on the total number of insurance premiums issued, according to SNL Financial. In light of the fact that insurers use numerous variables in pricing their policies, we obtained quotes for two hypothetical consumers, identical save only for their credit history. More specifically, one consumer has excellent credit while the other has no credit history.


Naturally, the gut reaction to all of this whether you have good credit or bad is that it seems a bit unfair. If a person has a low FICO score due to some missed payments, job loss, or other circumstances that doesn’t really have anything to do with their ability to drive safely.

But insurance companies look at it another way. For them, it’s all about “responsibility” they use statistics to conclude that a person who is irresponsible financially is more likely to file a claim and therefore a greater financial risk to the company.


Be sure to read Wallet Hub’s full study here in order to see exactly how your insurance company is ranking your credit profile in their risk assessment of you as a customer. While you can’t choose how an insurance company uses your credit, you can shop around to find a policy that is more advantageous to your situation.

Tom is a contributing writer for Jalopnik and runs He saves people money and takes the hassle out of buying or leasing a car. (


CarsofFortLangley - Oppo Forever

Hey Tom,

I work in insurance and thought I’d explain one of the motives for this practice. It isn’t that people with bad credit are bad drivers. It is that people with bad credit are more likely to rely on their insurance policy in the event of a minor accident, thus being a higher financial risk to the insurer.

If for example, you’re Bill Gates and you back into a pole or got in a fender bender, you will likely just pay to get it fixed yourself. However if you’re me a person with bad credit, you likely don’t have the cash/credit to do this and will submit a claim.

I agree that there are distasteful aspects to this practice, but insurers are not charities (Unless you’re ICBC).