How Does Your Credit Score Affect Car Insurance Rates?

If you got a quote or a renewal notice and the rate felt too high, your credit score is likely part of the reason. Poor credit costs an average of $320 more a month than good credit for a full coverage policy, which covers damage to your own car. That difference adds up to $3,838 a year, based on MoneyGeek's 2026 analysis.

But the number that matters more is this: GEICO charges poor-credit drivers $212 a month. State Farm charges $590 a month for the same driver, same car and same coverage. The $378 difference isn't about your credit score. Each insurance company uses its own internal formula to decide how much to penalize poor credit, and those formulas vary widely. Being with the wrong company for your credit category costs more than the credit itself.

If you're in California, Hawaii, Massachusetts or Michigan, credit can't affect your rate. State law bans credit-based pricing. Shop on driving record instead.

The biggest mistake poor-credit drivers make is spending months working on their credit score while staying with the same insurer, because the savings from a better credit score don't arrive for 6 to 24 months and a carrier switch can lower your bill right now.

Switching to a better-matched company can lower your monthly bill by up to $378, based on the difference between what GEICO and State Farm charge a poor-credit driver for the same coverage. Work on your credit score. But don't wait for a better score to lower your rate when switching companies can lower it right now.

Each lower credit category adds to your rate. The increase from good to poor credit is the biggest, at $3,838 a year.

Improving from poor to fair credit saves about $2,991 a year on your bill. That's the first milestone worth targeting. But fair credit with the wrong insurer can still cost more than poor credit with the right one. Shopping for a new insurance company and improving your credit score aren't two choices where you pick one; they just take different amounts of time.

Four states ban insurance companies from using your credit score to set your rate entirely: California, Hawaii, Massachusetts and Michigan. In those states your rate is set on your driving record and years of experience. Credit score has no effect.

Oregon allows insurance companies to use your credit score when you first buy a policy, but bans them from using credit to change your rate when the policy renews. If you bought a policy with poor credit in Oregon, the insurer can't raise your rate based on credit, but the insurer also can't lower your rate if your credit improves. Getting a new quote from a different insurance company is the only way to get a lower rate in Oregon once your credit improves.

Maryland allows insurance companies to use your credit score when you first buy a policy, but bans them from raising your rate at renewal based on credit, even if your credit gets worse. The amount Maryland insurance companies can add to your rate because of credit is also limited: no insurer can charge more than 40% above its standard rate based on credit alone. If your credit has improved since you bought the policy, your insurance company is required to review your credit and lower your rate, either when you ask or automatically every 2 years. Ask for that review rather than waiting for the 2-year cycle.

Every other state allows insurance companies to use your credit score both when you first buy a policy and when it renews.

When your policy renews every 6 or 12 months, your insurance company checks your credit score again to set your new rate. Any credit improvements you make now won't show up in your rate until your policy renews. If your renewal is less than 60 days away, focus on shopping first. Your credit score won't have time to improve before the renewal date.

If your renewal is 6 or more months away, do both things at once. Get new quotes now and start improving your credit so the lower rate shows up when your policy renews.

Checking insurance quotes doesn't hurt your credit score. Insurance companies run a credit check that doesn't count against your score (called a soft check) rather than the type of check that lowers your score when you apply for a loan. You can compare quotes from multiple companies in one afternoon with zero credit impact.

A driver with both poor credit and a DUI conviction pays the $453 a month that poor credit alone costs, plus a separate DUI penalty on top. Both add to your rate at the same time. Most insurance companies reduce the DUI penalty starting at year 3. California is the exception: California insurance companies look back up to 10 years at your driving record when setting your rate, instead of the usual 3 to 5 years. Your insurance company checks your driving record, not your criminal record, and those two records cover different time periods.

If your DUI is less than 12 months old, keeping your record clean from this point forward matters more than credit improvement. The extra amount you pay for the DUI in the first year is larger than the amount you'd save by improving your credit score. GEICO and Progressive charge less for drivers who have both poor credit and a violation than other major insurance companies do, so start your quote comparison with both.

1. Get quotes from GEICO and Progressive using your actual credit category. That takes 30 minutes.
2. If you're in Oregon, switching insurers is the only way to get a rate that reflects improved credit. If you're in Maryland, call your insurer and ask for a credit review.
3. Pull your credit report at AnnualCreditReport.com and check what percentage of your available credit you're using. If that percentage is above 30, paying down your balances to get below 30% is the fastest credit improvement that will show up in your insurance rate.
4. Write down your policy renewal date. Make your credit improvements early enough that your credit score has time to update before that date arrives.