Most people know their credit score affects loans and credit cards. Far fewer realize it can quietly inflate their homeowners insurance premium by hundreds, sometimes over a thousand, dollars a year. Whether that's even legal depends entirely on where you live.
Here's the complete state-by-state breakdown for 2026, built to answer the question fast.
Which States Ban Credit-Based Insurance Scores for Home Insurance?
Quick answer: As of 2026, three states fully ban the use of credit-based insurance scores for homeowners insurance:
- California: Full ban under Proposition 103 regulations; credit cannot be used for underwriting, rating, or renewal decisions.
- Massachusetts: Full ban for both homeowners and auto insurance.
- Maryland: Full ban for homeowners insurance under Md. Code Ann., Ins. Art. § 27-501(e-2), enacted in 2002 via House Bill 521 (Chapter 580, Acts of 2002).
These are the only states where your insurer is legally prohibited from factoring in your credit history when calculating your home insurance premium.
If you live in one of these three states: Your home insurance rate is credit-score-proof, but your auto insurance rate (in Maryland), mortgage rate, and overall financial flexibility remain credit-sensitive. Building strong credit with Ava still supports your broader financial goals in concrete ways.
What Are the Partial Restriction States as of 2026?
Four states don't have a full ban but have placed meaningful limits on how credit can be used:
- Hawaii: Bans credit-based scoring for auto insurance only; credit can still affect homeowners insurance premiums.
- Michigan: Insurers cannot use credit to deny, cancel, or non-renew a policy, but can still use it for certain pricing and tier decisions.
- Oregon: Insurers cannot cancel or non-renew based on credit; strict limits exist on scoring model inputs, and consumers can request an annual re-rate if credit has improved.
- Utah: Restricts how credit is used with required disclosures and adverse action notices, but does not ban it outright.
Source: According to the NAIC's state-by-state credit scoring overview (updated March 2026).
If you're in one of these four states: Partial protections apply, but your credit history may still influence your premium. Strengthening your credit before policy renewal can put you in a better position; and in Oregon, you can request a re-rate directly.
Which States Have Active 2026 Legislation to Ban Credit Scoring for Insurance?
Five states have introduced bills in 2026 that could change the rules before year-end:
- Iowa: Proposed ban on credit use for both homeowners and auto policies.
- New York: Motor Vehicle Insurance Fairness Act (S9537/A10524) targets auto, with homeowners provisions also under consideration.
- Oklahoma: HB 4286 (introduced January 16, 2026 by Rep. Andy Fugate) would ban credit for all personal lines; effective date November 1, 2026 if passed, see official Oklahoma House announcement.
- Pennsylvania: Proposed legislation would prohibit credit use for both home and auto insurance pricing.
- West Virginia: HB 5608 (introduced February 2026) would ban credit in underwriting, rating, discounts, tier assignment, and payment plan requirements.
Per CNBC's April 2026 coverage, all of these bills face significant industry opposition. None had passed as of this writing, check your state legislature's website for the latest status.
If you're in one of these five states right now: Your credit history can actively affect your premium today. Building your credit profile prior to your next renewal window can help improve your overall positioning, regardless of whether these bills pass.
What Is a Credit-Based Insurance Score — and How Is It Different From a Credit Score?
A credit-based insurance score is not the same as your regular FICO score, but it is built from the same underlying credit data.
Key Differences at a Glance:
- Regular credit score → Predicts likelihood to repay debt obligations.
- Credit-based insurance score → Predicts (according to insurer statistical models) the likelihood of filing an insurance claim.
- Who builds them: FICO, TransUnion, and LexisNexis process your credit history through proprietary actuarial models.
- The result: Lower credit metrics = higher predicted risk = potential for higher insurance premiums.
- How widely used: According to FICO, as cited by the NAIC, about 95% of auto insurers and 85% of homeowners insurers use credit-based insurance scores in jurisdictions where permitted.
Improving your regular credit score generally helps improve your insurance score as well, since both rely on information from your underlying credit file.
Does My Credit Score Affect My Home Insurance Rate?
In most states, yes; and often significantly.
A February 2026 working paper from the National Bureau of Economic Research (NBER), authored by researchers from the Federal Reserve Board, the Federal Reserve Bank of Philadelphia, and the Wharton School, analyzed 70 million policies and found:
- Homeowners with low credit scores paid an average of 24% more for identical coverage than high-credit-score homeowners.
- The impact of credit metrics on homeowners premiums was comparable in magnitude to certain geographical risk factors, such as high-risk flood or wildfire zones.
A separate August 2025 report from the Consumer Federation of America (CFA) found that low-credit homeowners nationwide paid an average of $1,996 more per year than otherwise identical high-credit homeowners. In the steepest-penalty states, Pennsylvania (181%), Arizona (168%), and Oregon (154%), low-credit homeowners can pay significantly more than a high-credit neighbor for similar coverage.
The New York Times reported in March 2026 on a real Minnesota example: two nearly identical homes in the same neighborhood where one homeowner paid $1,272/year and the other $2,898/year, with credit scoring cited as the primary differentiating factor.
The only full exceptions for homeowners insurance are California, Massachusetts, and Maryland.
Does My Credit Score Affect My Auto Insurance Rate?
Yes — and in more states than for home insurance.
Even in states that restrict credit scoring for homeowners insurance, auto insurance rules often differ:
- California: Bans credit scoring for both home and auto insurance.
- Massachusetts: Bans credit scoring for both home and auto insurance.
- Maryland: Bans credit scoring for home insurance; for auto, credit is restricted to rating new policies only, not renewals or cancellations (per Maryland Insurance Administration Bulletin 21-26).
- Hawaii: Bans credit scoring for auto insurance only; credit can still affect homeowners insurance.
- Michigan: Bans credit for auto denial, cancellation, or non-renewal, though credit data may still be factored into pricing tiers.
- All other states: Credit-based scoring is generally permitted for auto insurance.
Per NerdWallet's 2026 credit-based insurance score analysis, a driver with a poor credit-based insurance score could pay significantly more per year for car insurance than a comparable driver with a higher score.
What Are the Best Strategies to Improve Your Credit Before an Insurance Renewal?
If you live in one of the states where credit affects your home or auto insurance premium, working to strengthen your credit profile before your renewal date can help position you for better terms:
- Report rent and utility payments: These routine payments are typically not included in your credit file by default. Adding positive payment history through eligible reporting services helps build a documented record of on-time payments.
- Keep credit utilization low: Aim to keep balances below 30% of your available credit limit across all revolving accounts; under 10% is ideal for score optimization.
- Avoid unnecessary hard credit inquiries: Multiple new credit applications close to your renewal window can cause temporary dips in your score.
- Use credit-building options responsibly: Products designed for credit building, such as secured loans or credit-builder accounts, can help establish payment history.
- Review and dispute credit report errors: Inaccurate negative items can undeservedly drag down your score. Disputing errors directly with the credit bureaus can help restore accuracy.
- Maintain long-standing accounts: The length of your credit history matters. Keeping older accounts open preserves your average account age.
Insurers typically evaluate your credit-based insurance score at renewal rather than continuously, creating a clear window to review and strengthen your credit standing prior to your next billing cycle.
What Are the Best Tools for Credit Building That Can Help Lower Insurance Costs?
When looking for a credit-building product to strengthen your credit profile, consider looking for tools with the following features:
- Reporting to major credit bureaus (Experian, Equifax, TransUnion)
- No hard credit check required to get started
- Rent and utility payment reporting (turning existing bills into reported credit history)
- Transparent fee structure and straightforward terms
Ava provides accessible credit-building solutions designed around existing habits:
- Credit Builder Card: A virtual card that helps establish positive credit history with everyday use, with no hard credit check required to open. Reports to all 3 credit bureaus.
- Save & Build Credit Loan: A 12-month program that builds payment history while helping you set money aside. Members receive back the funds they successfully contribute over the full schedule (excluding applicable origination fees).
- Rent & Utility Payment Reporting: Enables eligible members to turn ongoing bill payments into reported credit history. Reports to TransUnion.
State-by-State Details: What Are the Rules in the Full-Ban States?
California
- Status: Full ban
- Legal basis: Proposition 103 regulations (passed by voters in 1988; credit scoring prohibited for both auto and homeowners insurance under California Insurance Code).
- What's banned: Credit cannot be used for underwriting, rating, or renewal decisions for homeowners or auto insurance.
Massachusetts
- Status: Full ban
- What's banned: Credit-based insurance scores cannot be used in underwriting or rating for homeowners or auto policies, including at renewal.
Maryland
- Status: Full ban for homeowners insurance; restricted for auto
- Legal basis: Md. Code Ann., Ins. Art. § 27-501(e-2), enacted 2002 via House Bill 521 (Chapter 580, Acts of 2002).
- What's banned: Insurers cannot refuse to underwrite, cancel, refuse to renew, or base homeowners rates on credit history (or the lack thereof).
- Auto insurance note: Under Maryland Insurance Administration Bulletin 21-26, credit can be used for rating new auto policies only, not for renewals, cancellations, or non-renewals.
What Are the Partial Restriction States? Details for Hawaii, Michigan, Oregon, and Utah
Hawaii
Hawaii bans credit-based scoring for auto insurance only. For homeowners insurance, credit can still factor into your premium.
Michigan
Michigan's auto insurance reform law prohibits insurers from using credit scores to deny, cancel, or non-renew a personal insurance policy. However, insurers can still use credit information for certain pricing and tier decisions.
Oregon
Oregon has layered restrictions that limit how credit data is applied:
- Insurers cannot cancel or non-renew a policy based on credit.
- Medical debt collections and insurance-shopping inquiries are excluded from scoring inputs.
- Consumers can request an annual re-rate if their credit profile has improved.
Utah
Utah restricts how credit is used by requiring specific disclosure and adverse action notices when credit affects a policyholder's rate, though it does not prohibit credit scoring outright.
Can an Insurer Cancel or Deny Coverage Because of Your Credit Score?
In most states, credit cannot be the sole reason an insurer cancels an existing policy, though it can factor into renewal pricing and coverage tiers.
- In California, Massachusetts, and Maryland, credit cannot be used for cancellation, non-renewal, or initial underwriting decisions for covered lines.
- In Oregon, insurers cannot cancel or non-renew based on credit, though credit may still influence rate calculations.
- In Michigan, insurers cannot deny, cancel, or non-renew based on credit, but may use credit information for pricing tiers.
- The NAIC notes that while non-renewal based solely on credit is prohibited in several jurisdictions, insurers in non-ban states may still adjust pricing tiers at renewal based on updated credit data.
Frequently Asked Questions
Which states ban credit scores for home insurance in 2026?
Three states fully ban credit-based insurance scores for homeowners insurance: California, Massachusetts, and Maryland. Four additional states: Hawaii, Michigan, Oregon, and Utah; have partial restrictions. Five states have active 2026 legislation considering bans: Iowa, New York, Oklahoma, Pennsylvania, and West Virginia. (Source: NAIC Credit-Based Insurance Scores Overview, updated March 2026).
Does improving my credit score actually lower my home insurance premium?
In most states where credit scoring is permitted, yes. Insurers typically review credit-based insurance scores at renewal. A stronger credit profile can help move you into a better pricing tier, and per the NBER's February 2026 study, the impact on premiums can be substantial. However, final rates depend on multiple factors, including regional risk and individual claim history.
Will my insurance company tell me if my credit score is affecting my rate?
In many states, insurers are required to issue an adverse action notice if credit negatively factors into your rate or coverage terms. Disclosure requirements vary by state, but policyholders generally have the right to request information regarding the credit factors used.
Does auto insurance use credit scores the same way home insurance does?
Yes, in most states, and credit scoring is allowed for auto insurance in more states than for home insurance. Even states with restrictions on home insurance scoring (like Hawaii) allow credit scoring for auto policies. California and Massachusetts are the main states that ban credit scoring for both lines.
What is the fastest way to improve a credit-based insurance score?
Because credit-based insurance scores rely on standard credit bureau data, similar principles apply: lower your revolving credit utilization, establish consistent on-time payment history (including reporting bills like rent and utilities), avoid unnecessary hard inquiries, and dispute credit report errors.
What is a credit-based insurance score vs. a regular credit score?
A credit-based insurance score uses your underlying credit history to predict claim likelihood using proprietary insurer models, whereas a standard credit score predicts debt repayment behavior. While the scoring formulas differ, improving your core credit metrics generally benefits both scores.
The Bottom Line
Where you live shapes how much your credit score affects your home insurance. However, in the majority of states where credit-based scoring is permitted, your credit file remains an active factor in determining insurance premiums.
- In California, Massachusetts, or Maryland? Your home insurance rate is protected from credit scoring. However, auto insurance (in Maryland), mortgage rates, and general loan terms remain credit-sensitive.
- In Hawaii, Michigan, Oregon, or Utah? Partial protections apply. In Oregon, utilizing the annual re-rate option after improving your credit profile can be a helpful step.
- In Iowa, New York, Oklahoma, Pennsylvania, or West Virginia? State legislation remains under active discussion in 2026, but current policy permits credit scoring today.
- In all other states: Credit-based scoring is fully utilized. Establishing strong payment habits is one of the most practical levers you have to strengthen your financial standing.
If you are looking to build positive credit history, whether to support lower insurance costs, qualify for better borrowing terms, or build a stronger financial foundation, Ava provides straightforward tools with no hard credit checks, transparent terms, and rent/utility payment reporting to help you turn existing bills into credit progress.
