Many insurance companies correlate your credit score to the risk you pose to them before establishing the premium they’ll charge you. A study in 2000 convincingly correlated credit scores to driving records, and since that time, the practice has been validated by the U.S. Supreme Court. With the court’s approval, it’s likely the practice is here to stay.

One of the interesting insights from the study found that drivers who had bad credit reports were likely to cost insurers more for each dollar that the insurance company had to pay out. The findings have been validated by the University of Texas at Austin and the Texas Department of Insurance. Although it may not seem that being financially responsible correlates with driving habits, the study findings and the court’s ruling are indisputable.


If you find that your car insurance premiums seem exceptionally high, even with a perfect driving record, you might find the reason lies in your credit score. Before you start looking for an insurance provider, check your credit report. Each person is entitled to one free credit report each year. If you find negative information, it’s entirely possible that someone’s made a mistake.

You have legal protections against inaccurate information on your credit report. If you have more time than money, contact the credit bureau directly and ask what their procedures are for correcting misinformation. They have to tell you and once you submit the proper information, they have 30 days to investigate and correct or dispute your claim.

If you decide to use a credit repair specialist, be wary, especially when choosing them online. Anyone can get a .org address and it doesn’t mean they’re a nonprofit or are a qualified specialist. Check with the Better Business Bureau before handing over any sensitive personal information to companies whose reputation you can’t establish with references or their history.

More Resources

Besides checking your credit rating, you can also access the same database that insurers use to view your insurance history. The Comprehensive Loss Underwriters Exchange (C.L.U.E.) provides this information and you have a right to see what the insurance companies have compiled about your claims. If it contains erroneous information, it’s your right to be able to correct it. 

Other Options

If all the information about you, your credit score and claims are correct, search for an insurance company that doesn’t rely on your credit score. They exist and you may find that your premiums will be lower. Although the studies from the industry and the State of Texas provided compelling correlations, exceptions do exist and some insurance companies realize that.

If you’re working with an insurance agent, tell the person about your situation and that you’d prefer that they start with quotes from companies who don’t evaluate your risk factor based on credit scores.

Use Insurance Wisely

Although it may seem punishing to the consumer, limiting your claims to just the big ones when exercising your benefits under your policy can also keep your premiums lower, since usage patterns go hand-in-hand with your credit score. Personally absorbing a small repair instead of filing a claim may keep your premium down.

Having a relationship with an insurance agent can also go a long way when you negotiate with insurance companies to find cheap car insurance. Someone who can go the extra mile for you may be able to help you identify a reputable company whose rates are fair, regardless of your credit history.