Study: People with the worst credit pay more than 2x more for car insurance

Key Findings

Here’s what The Zebra found in an analysis of the effect of credit scores on 83 million car insurance rates:

• Nationally, improving your credit score from Very Poor to Exceptional would yield a 273% savings. That's an average of $4,581 saved per year!
• Depending on the laws about insurance in their state, drivers with Very Poor credit scores can see rate increases anywhere between 0% and 252%.
• Drivers can lower their insurance rate by an average of 54% by improving their credit score by just one tier.
• Laws around the use of credit scores and histories in insurance ratings are changing, and it could mean savings for some drivers.

Drivers with Very Poor Credit Pay Nearly 3X More than Those with Exceptional Credit

Nationally, drivers with Very Poor credit scores (under 523) pay an average of $6,254 a year for their car insurance. In contrast, drivers with Exceptional credit scores (823 and above) pay just $1,673 per year — even if they have the exact same driving record. 

That’s an increase of $4,581 every year, or 273%, for having a bad credit score. By contrast, the average driver sees an insurance rate increase of $2,088 after causing a hit-and-run. In other words, as far as insurance goes, it’s significantly more expensive to have bad credit than it is to have committed even the worst traffic violations.

The Impact of Credit on Car Insurance Rates Varies from State to State

Every state has its own laws about how insurance is priced, including whether or not insurance companies can use your credit score to set your insurance premiums. In most states, insurance companies are free to consider their customers’ credit scores when determining rates and whether to deny, cancel or refuse to renew a policy. This leads to rate increases of anywhere from 74% in North Carolina to 285% in Minnesota if a customer’s credit score drops from Exceptional to Very Poor.

Four states—California, Hawaii, Massachusetts, and Michigan — have banned or limited credit scores as a rating factor for canceling, denying, or non-renewing a policy.^[1] Others (PA, NC, OR, UT, MD, NV) have various restrictions involving credit usage and insurance rates, so it's essential to look at your state specifically to get the details. Check out your state's Department of Insurance website to get additional information regarding credit use with insurance rates.^[2]

Here’s a full list of how much credit affects prices in all 50 states and the District of Columbia.

Note: The chart doesn't include data for the states where credit isn't a rating factor. 

Drivers Can Lower Their Insurance Rate by an Average of 54% by Improving Their Credit by Just One Tier

Improving their credit score is one of the most effective ways for drivers to save on car insurance. Moving up just one credit tier saves an average of 54% with the biggest jumps for those with lower credit scores.

The biggest jump is moving from Poor credit to Fair. By making that change the average person can cut their insurance rate in half. 

Are Laws About the Use of Credit Score Changing?

Changes to laws about the use of credit scores in car insurance pricing, denial and renewal have typically passed very slowly. California, Utah and Massachusetts changed their laws in the early 2000s, and Maryland and Oregon changed theirs in the early 2010s. Michigan’s laws occurred in 2020. 

In 2020, U.S. Senator Cory Booker (of New Jersey) proposed the PAID Act, or Prohibit Auto Insurance Discrimination Act, which would prohibit credit as a rating factor nationally.^[3] The last action on the bill was back in 2023 and since then it has not moved beyond committee. 

But would these laws result in savings for drivers? For most, yes, but not for drivers with the very best credit scores.

Michigan’s law provides a good illustration, as it's the most recent. The numbers above are from the year prior to the legislation being passed. Without it, Michiganders with Very Poor credit scores would have paid an average of $8,640 for their car insurance every year, while those with Exceptional credit scores paid an average of $2,326. Assuming all else was equal, that year both paid an average of $3,096 after the credit ban. 

The following year, the average amount Michiganders paid across all credit score levels was $2,639. While this means that drivers from Very Poor to Excellent credit scores paid less, those with Exceptional scores did pay slightly more.

Is the Amount Credit Score Matters Changing?

This is the not the first time we've looked at this data. Back in 2021, we did the same research with the same methodology. At that point in time, changing your credit score from the Worst to Exceptional led to a 114% savings in car insurance or about $1,537 saved per year. 

Obviously, the insurance rates that the average person is paying are higher since 2021 (you can see just how steeply rates have increased in our last Auto Insurance Trends Report). That said, it's also interesting that the percent difference has more than doubled. So your credit score seems to have an even larger impact on what you pay for insurance than it did four years ago. 

The one bright spot is that credit scores are also getting higher on average. Since 2019, average credit scores have improved in all 50 states. In 2025, the national average is 715.^[4] That said, for the 13% of people who still have the Worst scores (below 523), paying double to nearly triple for car insurance does not make it easier to get out of a financial hole. 

Tips for drivers

If a driver has a bad credit score, chances are they’re paying a lot more for insurance than some of their neighbors. But the good news is that there are ways to save, regardless of credit:

• Shop around. Some insurance companies cater to customers with poor credit. If drivers are paying too much for insurance with their current company, another company might be willing to work with them for a lower price.
• Make small improvements. If a driver has a bad credit score, their finances aren’t a lost cause. Doing whatever they can to improve their score can help save not just on car insurance but also on credit card payments, access to refinancing options, and more. The more they save, the more they can apply toward debts and improve their score even more.
• Look for discounts. Some insurance companies offer discounts for taking defensive driving courses, staying accident-free, earning good grades and more. Drivers should ask their insurers what discounts they might qualify for.
• Even drivers with good credit can save. The more a person improves their credit score, the more savings they’ll see on their insurance premiums. Even moving from Good to Exceptional credit can save an average of 26%, or $420, every year.