Yes, it does. In almost all states your credit score can and will affect your insurance rates.
Why does a credit score affect your car insurance premium? It’s because they view you as more of a risk. Research shows that people with lower credit scores file more claims than those with better credit.
Applying for insurance, however, will NOT affect your credit score like applying for a credit card or a car. This is not a hard inquiry and won’t impact your credit.
Each state and company differs on the discounts given for better scores. However, on average, people with low credit scores could pay double the premium.
According to Value Penguin, five states do not use credit scores for insurance: Hawaii, California, Michigan, Washington, and Massachusetts.
Six states may double your rate with bad credit: Arizona, Texas, New Hampshire, New Jersey, Minnesota, and New York.
If your credit score improves, it’s smart to shop for better rates — especially if your current insurance was set up when your score was lower.
Good to know: Shopping for insurance does not create the same kind of hard inquiry you would see from applying for credit.
If it’s time to look for better rates, let us know. We work with amazing insurance agents and can help you save.