In Plain English

Your credit score is one of many factors that the majority - about 90% - of car insurance companies use to determine your rates. And while it is possible to get a policy without a credit check, chances are you won't want to.

Posted on: Jul 23, 2015

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The long and short of it: not many, and even when companies offer no credit score insurance policies, the policies will include higher-than-average rates. This spike in premium is because credit is considered an extremely meaningful factor in insurance deliberations. Typically, policies that do not require a credit check are sold by high-risk insurers, which makes sense because electing to obtain a policy sans credit check automatically places you into one of the highest risk groups.


But is this a fair practice? Many people say no. In fact, detractors frequently compare insurer's use of credit scoring to redlining, and state that it discriminates against the 42.9 million Americans with medical debt, minorities, and low-income applicants. For these reasons, the use of credit in underwriting decisions has been banned in Hawaii, Massachusetts, and California.


These three states aside, the fact remains: Your credit score is one of the factors that the majority of car insurance companies use when determining what your policy rates will be. And there is a statistical correlation between your credit score and how likely you are to file a claim. Thus, applicants with a credit score of 650 or higher will qualify for lower rates. Applicants with low credit scores can potentially offset the increase in rates by taking advantage of pay-in-full or other appropriate discounts. One more pro tip? Track your credit score and make sure to dispute any errors right away.

Favorable credit factors may include:

  • Established credit history (length and variety are taken into account)

  • No late payments or past-due accounts

  • Open accounts in good standing

Unfavorable credit factors may include:

  • Late payments

  • Accounts in collection, bankruptcies, foreclosures or liens

  • Limited credit history

  • Numerous hard credit inquiries


Have less than ideal credit? The Zebra compares quotes from hundreds of carriers so you can find the best option for your exact situation.