Which Car Insurance Companies Do Not Use Credit Scores?

Which insurance companies don't use credit scores?

All major car insurance companies — including GEICO, Progressive and State Farm — do a credit check during the quoting process. In fact, credit is one of the major rating factors used by underwriters when determining car insurance rates. At present, only four states disallow the use of credit history in setting rates: California, Hawaii, Massachusetts and Michigan though other states are considering banning the practice. 

The data-driven insurtech Root Insurance has recently vowed to phase out the use of credit when setting rates. Root plans to be the first car insurance company to do so, though the use of credit as a rating factor seems to be in place as of 2022.

Why do car insurance companies check credit?

Car insurance companies view your credit score as an informative rating factor. Historical data from the Federal Trade Commission shows drivers with poor credit file more claims than do drivers with excellent credit, and that these drivers' claims are more costly to an insurer.

Ultimately, the goal of underwriters is to minimize the risk to the insurer, which means that those seen as "high-risk" are often subject to higher premiums — or sometimes denied coverage entirely. Some companies place a higher emphasis on credit than others, meaning that quotes can vary widely from one insurer to another.

How does credit affect car insurance premiums?

Those with good credit often pay far less for insurance than do those with a poor credit history. The difference in average auto insurance rates between the lowest level of credit and the highest is upward of $1,500 per year.

What are the best options for no-credit-check car insurance?

In some cases, your credit won't be used to determine your insurance premium. If you live in California, Hawaii, Massachusetts or Michigan your credit score isn't a rating factor. This is because these states' legislators feel that credit score evaluation may disadvantage low-income drivers. If you live in one of these states, you're in the clear. 

Outside of these states, few options exist for car insurance without a credit check, though you should still be able to find good coverage at a reasonable price by shopping around or considering a usage-based telematics program.

Telematics car insurance 

For drivers worried about credit checks, telematics and usage-based car insurance programs can be good options. These programs base your insurance rates primarily on your driving performance and frequency rather than demographics alone. Using an in-car device or a mobile app, a telematics device monitors your driving behaviors to create your premium.

In theory, usage-based insurance is great for safe drivers who might be paying more for car insurance because of non-driving-related factors — for instance, poor or low credit. While telematics programs are relatively new in the insurance industry, most popular companies have their own programs in addition to their standard pricing model.

How does credit score impact insurance: a state-by-state analysis

Depending on your state, a poor credit score can impact you differently while shopping for auto insurance. As mentioned above, California, Hawaii, Massachusetts and Michigan currently ban insurers from using credit. 

While not outright banning the process, the states of Texas and Colorado have limits on how insurers can use these scores, or at least require the justification of their use from insurers according to Bloomberg. 

Find your state below and follow the link for more state-specific information.