Car Insurance and Credit: Which States Ban or Limit Credit-Based Insurance Scores
If your credit took a hit, you may be paying for it on your car insurance as well as your loans. In most states insurers are allowed to use a credit-based insurance score when they price or approve a policy. A handful of states block it for auto insurance, and many more limit how it can be used. Here is how the score works and what each state's rules allow, taken from state law and the insurance commissioners' own chart. This guide is part of our car insurance by driver profile series.
Key takeaways
- A credit-based insurance score predicts the likelihood of a claim, not whether you repay debt, per the NAIC.
- California, Hawaii, Massachusetts and Michigan block credit in auto insurance pricing, each by its own rule.
- Maryland, Oregon, Utah, Washington and Texas allow it with specific limits.
- In most states, credit cannot be the sole reason to raise your rate or to deny, cancel or non-renew a policy, per the NAIC.
- If credit was part of an adverse decision, you are generally entitled to notice and can dispute errors on your credit report.
What is a credit-based insurance score?
The National Association of Insurance Commissioners explains that these scores are "based partly or entirely on information from a consumer's credit history" and "are used to estimate how likely someone is to file an insurance claim, not how likely they are to repay a loan." The NAIC also cites a FICO estimate that "about 95 percent of auto insurers and 85 percent of homeowners insurers use them in states where the practice is allowed."
Insurers use the scores in two places. Underwriting decides whether you are eligible. Rating decides the price. The NAIC notes insurance scores "are typically only one of many inputs," alongside driving record, claims history, location, coverage limits and deductibles.
Why do insurers use credit at all?
Because it predicts claims. The Federal Trade Commission studied the question for Congress and announced in July 2007 that "these scores are effective predictors of the claims that consumers will file." The same release said scores "are distributed differently among racial and ethnic groups, and these differences are likely to have an effect on the premiums that these groups pay, on average." That tension is why state rules vary so much.
Which states don't use credit for car insurance?
Four states block credit from auto insurance pricing, each by a different route.
| State | Rule for car insurance | Where it comes from |
|---|---|---|
| California | Credit is not a permitted rating factor. Rates follow driving safety record, annual miles and years of experience first, then factors the commissioner adopts by regulation. None of the adopted optional factors is credit. | Cal. Ins. Code § 1861.02; 10 CCR § 2632.5(d) |
| Hawaii | "Insurer shall not base standard or rating plan upon a person's credit bureau rating." | HRS § 431:10C-207, per NAIC chart |
| Massachusetts | "Rates shall not be based, in whole or in part, on credit information." Insurers "Shall not cancel or refuse to renew policy based on credit information." | M.G.L. ch. 175E § 4 and ch. 175 § 4E, per NAIC chart |
| Michigan | "An insurer shall not use an individual's credit score to establish or maintain rates or rating classifications for automobile insurance." | MCL 500.2162, per NAIC chart; Michigan DIFS |
| Maryland | Insurers "May not refuse to underwrite, cancel, or renew based wholly or partly on the credit history or absence of credit history." Credit may be used to rate a new auto policy, but not to "refuse to underwrite or renew an auto policy or increase its premium." | Md. Ins. Code § 27-501; COMAR 31.15.11; Bulletin 2021-26, per NAIC chart |
| Utah | Auto insurers "May only use credit information to reduce rates or in conjunction with other factors," and may not use it to cancel or non-renew coverage in place 60 days or more. | Utah Code § 31A-22-320; Utah Admin. Code R590-219, per NAIC chart |
| Oregon | Insurers "May not cancel or nonrenew a policy of personal insurance based in whole or in part on a consumer's credit history or insurance score." You may request yearly rerating. | ORS 746.600 to 746.686, per NAIC chart |
| Washington | "Credit history or insurance score may not be used to cancel or non-renew insurance." | RCW 48.18.545, per NAIC chart |
| Texas | An insurer may not "Turn you down or charge you more only because of your credit score." You may request re-rating on a current credit report once each 12 months at renewal. | Texas Department of Insurance; Tex. Ins. Code § 559.058, per NAIC chart |
Each NAIC chart row above is marked as updated in June 2025. State rules change; check your state insurance department for the current version.
What protections do you have in states that allow credit?
The NAIC summarizes the common floor: "In most states, insurers cannot use these scores as the sole reason to increase rates or to deny, cancel, or refuse to renew a policy." It adds that "Many states also require insurers to notify consumers when credit information played a role in an adverse decision," and that consumers "generally have the right to receive notice, review their credit report, and dispute inaccuracies."
Several states also carve out hard times. The NAIC chart says Michigan insurers must provide "reasonable exemptions" when your credit "is unduly influenced by a serious illness or injury, death of a spouse, identity theft, temporary loss of employment resulting from involuntary termination, or a catastrophic event." Texas requires an exception for "an extraordinary life circumstance," including divorce, temporary loss of employment and military deployment overseas.
What to do if credit is costing you: Ask your insurer whether credit was a factor in your rate. If it was, request the reasons in writing, pull your credit report and dispute any errors. In Texas and Oregon, the NAIC chart says you can ask for re-rating once a year, which is worth doing after your credit improves.
How much does credit change a car insurance rate?
It varies by insurer and state, and we do not publish our own rate estimates. What the regulators say is that credit is one input among many. If your premium jumped and you are trying to separate a credit effect from everything else, our car insurance cost guide and why your car insurance went up in 2026 walk through the other causes first.
What if you have no credit history?
Thin files are common for people new to the country, new to credit, or newly licensed as adults. Rules here vary too. The NAIC chart says Oregon and Washington insurers may not consider the absence of credit history, and its Michigan entry says insurers "May not consider absence of credit history negatively." If you are also new to driving, see car insurance for new adult drivers.
Why does the quiz ask for a credit range?
Because a self-reported range is enough to point you toward a comparison, and it does not require your Social Security number. The quiz offers five choices: Excellent, Good, Fair, Below 600 and Not sure. Whatever insurer you end up with will apply its own filed rules, within the state limits above.
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Frequently asked questions
Which states ban credit scores for car insurance?
California, Hawaii, Massachusetts and Michigan block credit in auto insurance pricing, each through its own statute or regulation. California does it by leaving credit off the list of permitted rating factors.
Is a credit-based insurance score the same as my FICO credit score?
No. The NAIC says traditional scores "predict loan repayment, while insurance scores predict the likelihood of an insurance claim," and they "may weigh credit factors differently."
Can my insurer drop me because my credit got worse?
In most states credit cannot be the sole reason to cancel or non-renew, per the NAIC. Maryland, Massachusetts, Michigan, Oregon, Utah and Washington go further. The NAIC chart says Michigan insurers "shall not use credit information or score as any part of a decision to deny, cancel, or not renew a policy."
Can I ask for an exception after a job loss or illness?
In some states, yes. Michigan and Texas require exceptions for credit damaged by listed life events, per the NAIC chart. Ask your insurer in writing and include documentation of the event.
Will improving my credit lower my rate?
It can in states that allow credit, at the insurer's next re-rating. Texas and Oregon let you request re-rating once a year, per the NAIC chart.
Sources
- National Association of Insurance Commissioners, "Credit-Based Insurance Scores," https://content.naic.org/insurance-topics/credit-based-insurance-scores, accessed October 1, 2026.
- National Association of Insurance Commissioners, state law chart on use of credit reports and scoring in underwriting, https://content.naic.org/sites/default/files/model-law-chart-mc-20-use-of-credit-reports-scoring-in-underwriting.pdf, accessed October 1, 2026.
- Michigan Department of Insurance and Financial Services, "Consumer Protections," https://www.michigan.gov/autoinsurance/law-changes/consumer-protections, accessed October 1, 2026.
- California Insurance Code § 1861.02, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=1861.02, accessed October 1, 2026.
- California Code of Regulations, Title 10, § 2632.5, via Legal Information Institute, https://www.law.cornell.edu/regulations/california/10-CCR-2632.5, accessed October 1, 2026.
- Federal Trade Commission, "FTC Releases Report on Effects of Credit-Based Insurance Scores," https://www.ftc.gov/news-events/news/press-releases/2007/07/ftc-releases-report-effects-credit-based-insurance-scores, accessed October 1, 2026.
- Texas Department of Insurance, "Auto insurance guide," https://www.tdi.texas.gov/pubs/consumer/cb020.html, accessed October 1, 2026.
State rules on credit in insurance change. The state rows above summarize the NAIC chart (June 2025 rows) and the state sources cited, as accessed October 1, 2026. Your state insurance department has the current rule. This is general information, not legal or credit advice.