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If you’ve ever gotten a car insurance quote that felt way too high, even with a clean driving record, your credit might be a factor. But here’s where most people get tripped up: the score insurers are looking at isn’t the same credit score you check when applying for a loan or a credit card.
There’s a completely different number called a credit-based insurance score, and most Americans have never heard of it. Here’s what it is, how it works, and what you can actually do about it.
What Is a Credit-Based Insurance Score?
A credit-based insurance score is a numerical rating derived from your credit report that insurance companies use to predict the likelihood you will file a claim that results in a financial loss. Its purpose is not to assess your creditworthiness, but to assess your insurance risk. It is distinct from a standard credit score, even though both draw from the same underlying credit file.
According to the National Association of Insurance Commissioners (NAIC), last updated March 2026, the practice was introduced by FICO in the early 1990s and has since become standard practice across the industry. The core premise is that how a person manages their finances correlates statistically with how likely they are to file an insurance claim, regardless of their actual driving record or home maintenance history.
Who creates and uses these scores?
Credit-based insurance scores are produced by specialized data analytics vendors, not your bank or lender. The primary providers are:
- FICO: produces the FICO Insurance Score, available through Experian and TransUnion; scores range from 100–900.
- LexisNexis: produces the Attract score, ranging from 200–997; widely used by auto and homeowners insurers.
- TransUnion: produces its own Insurance Risk model, ranging from 300–900.
Insurers use these scores at two key points: underwriting (deciding whether to offer coverage at all) and rating (deciding what premium to charge). They can also pull an updated score at policy renewal. As the NAIC notes, the use of these scores is regulated at the state level, and the rules vary significantly depending on where you live.
What Factors Affect Your Credit-Based Insurance Score?
Credit-based insurance scores draw from the same raw credit report data as your regular FICO score, but weight the factors differently. According to FICO’s own insurance scoring site and as published by the NAIC, FICO looks at five general areas:
● Payment history (~40%): How consistently you’ve made payments on your outstanding debts. A single 30-day late payment or collection account can drag your score down significantly, and recovering typically takes 12 to 18 months of consistent on-time payments afterward.
● Outstanding debt (~30%): The total debt you currently carry, including your credit utilization ratio (the percentage of your available revolving credit you’re currently using). High utilization signals financial stress to insurers, even if you’re making payments on time.
● Length of credit history (~15%): How long you’ve held open accounts. Thin or short credit files are viewed as higher risk because there’s simply less data for insurers to evaluate.
● Pursuit of new credit (~10%): Whether you’ve recently applied for new lines of credit. Multiple hard inquiries in a short window can flag financial stress, though rate-shopping for a single mortgage or auto loan within a 30-day period is typically counted as just one inquiry.
● Credit mix (~5%): Whether you have a combination of revolving accounts (like credit cards) and installment accounts (like auto or personal loans). This is the smallest factor and not worth opening new accounts just to influence.
Note: These percentages reflect approximate weightings for FICO’s insurance scoring model, as referenced by the NAIC. Exact weights can vary by model version and insurer. Individual results depend on the full picture of your credit file.
Importantly, none of this data includes your race, religion, gender, income, occupation, or location (those factors are legally prohibited from use in credit), based insurance scoring under the Fair Credit Reporting Act (FCRA).
How Is a Credit-Based Insurance Score Different From a Regular FICO Score?
Same raw data, different lens. Your FICO credit score and your credit-based insurance score both pull from the same credit report, but they are built to answer fundamentally different questions.
- Your standard FICO score asks: “How likely is this person to repay a debt?”
- Your insurance score asks: “How likely is this person to file a costly insurance claim?”
The key difference: Insurance scoring places more weight on payment history and less on credit mix compared to a standard lending score. Every late payment matters more here than it would on a standard credit application — which is why someone with a solid FICO score can still end up paying elevated premiums if their payment history has a few blemishes.
A good FICO score does not guarantee a good insurance score. Someone with a solid overall FICO number but a few late payments on record could end up with a worse insurance score, and pay higher premiums, than their credit score alone would suggest. Conversely, someone with a modest FICO score but a spotless payment history may actually fare better on the insurance side.
How Widely Do Insurers Actually Use Credit-Based Insurance Scores?
Very widely. According to the NAIC, FICO estimates that approximately 95% of auto insurers and 85% of homeowners insurers use credit-based insurance scores in states where the practice is legally permitted, making it one of the most common underwriting tools in the industry.
The financial stakes are significant:
- A March 2026 NerdWallet analysis found that drivers with poor credit pay an average of 69% more for car insurance than drivers with good credit, and in some states, that gap adds over $1,000 per year for identical coverage.
- For homeowners insurance, a National Bureau of Economic Research study found that homeowners with low credit scores pay an average of 24% more than those with high scores for equivalent policies.
That said, not every state permits it. Seven states either ban or significantly restrict the use of credit-based insurance scores, according to Experian:
- California: banned for both auto and homeowners insurance
- Hawaii: banned for auto insurance
- Massachusetts: banned for both auto and homeowners insurance
- Michigan: banned for auto rating and underwriting
- Maryland: banned for homeowners insurance; limited use on new auto policies only; cannot be used to cancel, deny, or increase renewal premiums
- Oregon: may be used for initial underwriting only; banned for cancellations and renewals
- Utah: may only be used to offer discounts, never to increase premiums
As of mid-2026, bills are also pending in Iowa, New York, Oklahoma, and Pennsylvania that would further restrict or ban the practice, per CNBC. If you live outside the seven states above, your insurer is almost certainly factoring your credit-based insurance score into your premium.
How Can You Find Out What’s Affecting Your Credit-Based Insurance Score?
You won’t find your credit-based insurance score on a banking app. Unlike traditional FICO scores, these aren’t freely available to consumers in most cases. But you do have options:
Start with your free credit report
The same credit data that feeds your insurance score lives in your credit report. You’re entitled to a free report from each of the three major bureaus, Equifax, Experian, and TransUnion, at AnnualCreditReport.com. The three national credit bureaus have permanently extended free weekly access to your reports, as noted by the FTC.
When you pull your reports, scan for issues that can quietly drag down your score:
● Late payments or delinquencies
● Collections accounts
● High credit utilization
● Multiple recent hard inquiries
● Errors or outdated information (The CFPB recommends reviewing your reports regularly and disputing any errors directly with the bureau).
Can you ask your insurer directly?
Yes. If you’re offered less favorable terms at application or renewal, the insurer may be required by state law to send you an adverse action notice explaining that credit information played a role. You can also ask your agent directly whether a credit-based insurance score was used. For LexisNexis specifically, you can request a Consumer Disclosure Report directly from them to see what data they hold on you.
What Are the Best Strategies to Improve Your Credit-Based Insurance Score Before Renewal?
The good news: the same habits that assist your regular credit score can positively influence your credit-based insurance score. Because both are built from the same credit report data, focusing on core financial habits can improve your standing across both metrics.
- Pay on time, every time: Payment history is the single heaviest factor in your insurance score at roughly 40%. Building a consistent record of on-time payments is the most impactful step you can take.
- Keep balances low: Outstanding debt is the second-largest factor at around 30%. Try to keep credit card utilization below 30% of your available limit — ideally below 10% if possible.
- Don’t close old accounts: Length of credit history counts for HTML roughly 15%. Keeping your oldest accounts open helps maintain the long-term track record that both lenders and insurers look for.
- Limit new credit applications: Only apply for new credit when you genuinely need it, as multiple applications in a short window can flag you as higher risk.
- Build a mix of credit types: Having both a revolving account (like a credit card) and an installment loan shows you can manage different credit types responsibly. At around 5%, this is the smallest factor, but it helps round out a profile.
Realistic improvement timelines
- 30–60 days: Paying down high balances can improve your utilization ratio relatively quickly.
- 3–6 months: Consistent on-time payments start building a visible track record.
- 12–18 months: Significant recovery timeframe from a late payment or collection account.
- 2+ years: Meaningfully improving a thin credit file or lengthening your average account age.
Frequently Asked Questions
Can my insurer use my credit score without telling me?
In most states, yes, unless your state requires an adverse action notice due to a negative premium impact or denial.
Does checking my own credit hurt my insurance score?
No. According to FICO’s insurance scoring site, checking your own credit report is a soft inquiry and has no impact on any credit or insurance score.
What’s the best fintech app for building credit that also helps my insurance score?
Look for apps that report on-time payments to major credit bureaus, since insurers pull from this data. Tools that focus on payment history and credit utilization address the factors that matter most.
Where Does Ava Come In?
If you’re newer to credit or working to rebuild your history, this is exactly where Ava fits in, mapping directly to the core components that shape your credit profile and influence insurance scoring data.
- Ava’s Credit Builder Mastercard provides a clear path to start building a consistent on-time payment history — the #1 factor in both credit and insurance scoring models.
- The Save & Build Credit Loan adds a structured installment account to your profile, helping you build a positive payment history and credit mix simultaneously.
- If you pay rent or utilities, Ava can report those housing payments to help turn your routine bills into positive history that strengthens your underlying credit data.
None of Ava’s credit-building products require a hard credit check, and there is no interest charged on builder products. This allows you to focus entirely on building the credit habits that matter for your financial future without unnecessary friction.
The Bottom Line
Your credit-based insurance score is a real number that directly affects what you pay for auto and homeowners insurance in most U.S. states. While it draws from the same underlying data as your FICO score, it weights factors differently to evaluate risk rather than creditworthiness. The best approach is to focus on steady financial habits: on-time payments, low credit card balances, and thoughtful utilization of new credit lines. If you are laying your credit foundation, tools like Ava can help support your progress one payment at a time.
Disclaimer: This content is for educational purposes only and does not constitute financial, legal, or insurance advice. Credit-based insurance scoring rules and regulations vary by state and by insurer. Consult your insurance provider or a licensed insurance professional for guidance specific to your situation. Ava Finance, Inc. is a credit-building product provider and is not affiliated with any insurance company or insurance scoring model mentioned in this article.
