Does Your Credit Score Affect Your Insurance Rates? What Retirees Should Know

Many U.S. insurance companies evaluate parts of a consumer’s financial history when setting prices for certain policies. One common tool is a
credit-based insurance score, which is created using information from a credit report. It’s important to know that this practice is regulated at the state level and is not permitted everywhere.
For example, using credit information for insurance pricing is banned in Massachusetts, Michigan, Hawaii, and California. In other states, it may be allowed only for certain types of coverage (often property-related policies such as auto and homeowners), while some states allow broader use.

For adults planning for retirement, understanding how insurers may use credit-related data can help explain why premiums sometimes vary between people who appear to have similar coverage needs. This article is educational only and does not provide personalized insurance, financial, tax, or legal advice.

Does your credit score affect your insurance rates?

In many states, insurers can use a credit-based insurance score as one input in underwriting and rating for policies such as auto and homeowners insurance. This is different from a traditional credit score used by lenders. It is designed to help insurers estimate risk trends using statistical models.
Not every insurer uses the same model, and the weighting of credit information can vary by company and by state rules.

Even where it is allowed, a credit-based score is typically not the only factor. Insurers usually combine multiple variables—such as location, claims history, and policy features—to determine a premium. That means two people with similar credit histories may still receive different quotes based on other underwriting details.

What is a credit-based insurance score?

A credit-based insurance score is a risk-assessment measure built from credit report data. While the specific formulas are proprietary and differ by insurer, the score often reflects patterns such as:

• Payment history (on-time vs. late payments)
• Credit utilization (how much revolving credit is used compared to available limits)
• Length of credit history
• Recent credit activity (such as new accounts or inquiries)
• Negative items like collections, judgments, or bankruptcies (where applicable)

The purpose is to evaluate statistical risk patterns—not to assess personal character or “worthiness.” Because scoring models can differ, a consumer may not see a one-to-one relationship between their lender-oriented score and their insurance price.

How it differs from a traditional credit score

Traditional credit scores are generally designed to estimate the likelihood that a borrower will repay a loan. Insurance scores, by contrast, are designed for underwriting models that estimate the probability or cost of future claims based on historical patterns.
Although both may use similar source data (credit reports), the weighting and interpretation can differ.

Why do insurers use credit-based insurance scores?

Insurance pricing relies on actuarial research and large datasets that aim to estimate risk. Some research has identified a correlation between certain credit patterns and claim frequency or severity in particular lines of insurance. Insurers may use that relationship as one part of a broader underwriting framework.

However, correlation does not prove causation, and state regulators may limit how credit information can be used. In addition, insurers generally consider many other details that may be more directly connected to the insured asset or behavior.

Several factors insurers may consider

Auto insurance examples

• ZIP code or garaging location
• Driver age and experience
• Vehicle make, model, and year
• Annual mileage
• Driving record and prior claims
• Local accident and theft statistics

Homeowners insurance examples

• Home age, construction type, and roof condition
• Proximity to fire protection services
• Weather, wildfire, flood, or other catastrophe exposure
• Prior claims (where permitted)
• Coverage limits, deductibles, and endorsements

Because underwriting is multi-factor, a credit-based component usually works as a modifier within a larger pricing model rather than a single “yes/no” gate.

Can you ask whether a credit-based insurance score was used?

In many cases, you can contact your insurance company (or agent) and ask whether a credit-based insurance score was used in underwriting and rating your policy. Depending on the state and the insurer, you may also be able to ask:

• Whether credit information affected your risk tier or rating category
• What consumer reporting source was used
• Whether an adverse action notice applies if pricing was materially impacted

Disclosure requirements vary by state. If you live in a state where the practice is banned, the insurer should not be using credit information to set rates in the first place.

Improving factors that may influence insurance scoring

If you want to strengthen the underlying credit behaviors that can feed a credit-based insurance score, the general approaches are similar to those often recommended for overall credit health. These steps may take time to show up in credit report data:

• Make payments on time and address past-due accounts
• Keep revolving credit balances lower relative to available limits
• Review credit reports for errors and dispute inaccurate items through the appropriate channels
• Be cautious with frequent new credit applications that create multiple inquiries

This article does not imply that any action will produce a specific premium outcome. Insurance pricing depends on multiple variables, and scoring models differ by company and state.

Risk-aware considerations for retirement planning

As you approach or enter retirement, insurance decisions often intersect with budgeting, asset protection, and lifestyle changes (such as driving fewer miles or downsizing a home). Consider these neutral, risk-aware points when evaluating coverage:

• Premiums can change due to regional risks (weather losses, repair costs, claim trends), not just personal factors.
• Different insurers may weigh underwriting factors differently, so quotes can vary even for similar coverage.
• Price is only one element—coverage limits, deductibles, exclusions, and carrier service also matter.
• State regulations can affect what insurers may consider and what disclosures must be provided.

External link suggestions: 

• 
  Consumer Financial Protection Bureau (CFPB): Credit reports and scores
  
• 
  Federal Trade Commission (FTC): Fair Credit Reporting Act resources
  
• 
  FINRA Rule 2210 (Communications with the Public)