Credit Score Down, Car Insurance Up

Credit Score Down, Car Insurance Up

You are required by law to carry liability insurance if you want to operate a vehicle in West Virginia. The same is true throughout the country unless you are from The Granite State of New Hampshire. Most people understand the necessity of car insurance and the importance of protecting yourself from risk by carrying adequate coverage. We also know that if you are caught driving without insurance in West Virginia, you could lose your license for a period of time and be subjected to civil penalties.

What most people do not understand is exactly how car insurance companies decide what rate you get quoted or what impacts the rate. Even though insurance companies flood the airwaves with commercials, they tend to leave out the fine print. One particular factor in determining your car insurance policy may be a surprise to many reading this – your credit score.

As your credit score goes down, your car insurance goes up. One would have to dig hard to argue the correlation between being late on a bill and being bad on the road, yet those with poor credit scores or no credit history can pay substantially more for car insurance. According to a 2020 NerdWallet rate analysis, poor credit can increase your car insurance rates dramatically and, in some circumstances, rates for drivers with poor credit can be up to 75 percent higher than those with good credit.

The National Association of Insurance Commissioners (NAIC) attributes the following factors in weighing a credit-based insurance score: payment history, outstanding debt, credit history length, pursuit of new credit and your credit mix.

Some states are cracking down on insurance companies using your credit score as part of their policy calculation. California, Hawaii, Massachusetts, Michigan and New Jersey all ban the use of credit scores in determining car insurance rates.

In my role as a state legislator, I am trying to make West Virginia the sixth state to eliminate the use of credit information. House Bill 2531, which I introduced, would prohibit the use of credit history in insurance transactions. Overdue bills are not the same risk on the road as those with real driving offenses – like DUI – and insurance companies should not be allowed to continue this unfair practice.


One particular factor in determining your car insurance policy may be a surprise to many. Shawn Fluharty explains.