Ron Attias is a licensed insurance broker. He has no particular loyalty to any one insurance company, so he is able to shop all major insurance carriers. This means that you always get the BEST plan at the LOWEST price. Each plan can be customized to fit your specific healthcare needs and budget.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Mar 13, 2020

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Can I be totally honest with you? When I originally began selling life insurance years ago, I would regularly get asked: “Will this influence my credit?” or “Will you be pulling my credit for this?” 

I used to reply with a stern “no!” consistently, and I sincerely didn’t comprehend why somebody would figure their credit would be affected if they chose to buy life insurance. 

But listen to this: I had no idea that all of us have a genuine “insurance score” that decides our insurance coverage rates.

Not only that, but your credit can affect certain types of protection like auto accident coverage, tenants or renters insurance protection, and mortgage holders or home insurance protection.

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Let’s explore how your credit-based insurance score functions, how it influences your monthly premiums, and what moves you can make to see an increase in your insurance score to help bring down your month-to-month insurance premiums.

You know the score. It starts with FICO.

What is your FICO Score?

Here’s a general once-over of what your credit score is. 

The gist: Credit scores enable lenders the ability to get a reasonable idea of your capacity to pay back a loan. So, the higher the score, the better the probability you will pay the loan back. 

If your score is in the middle, then you will see higher financing costs to get credit, and if your score is excessively low, you probably won’t get that loan.

And guess what?

There are plenty of ways to get a free credit score online or through your banks. 

So, yes, much like there are multiple online TV streaming services (i.e., Netflix, Amazon, Hulu), there are additionally various FICO ratings (i.e., FICO, VantageScore). 

The FICO Score was created by the Fair Isaac Corporation, which changed its name to FICO in 2009.

Distinctive FICO ratings can have diverse score ranges. Your FICO Score is a three-digit number that can go from 300 to 850. 

Does this look familiar? 

Experian score ranges

FICO uses a unique scoring system to create your FICO Score, and the data comes from open records and the three noteworthy credit authorities: Transunion, Experian, and Equifax. 

How Google gets about 90 percent of web search traffic, the FICO Score has turned into the primary choice for over 90 percent of the top banks to enable them to decide your capacity to pay back borrowed money.

So, when you hope to buy a vehicle, purchase a home, get an individual advance, apply for a business advance, rent a car, or lease a condo, there is an incredibly high likelihood that these banks will take a gander at your FICO Score to settle on their loaning choice. 

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How an Insurance Score Works

Strictly speaking, an insurance score is mainly used to determine the probability of you filing an insurance claim. Insurance scores are most widely used in auto and homeowners’ insurance.

But don’t get me wrong, depending on the state that you live in, they sometimes determine policies like health insurance or life insurance

So, yes, it’s legal.

Things being what they are, you’re probably asking yourself: “How the heck can an insurance score decide whether I will file an insurance claim or not?” 

Well, the hard answer is that insurance companies have been investigating data for years and using studies to figure out that people who don’t take care of their credit are also most likely to be in an accident.

Having a higher risk of an accident means higher claims payouts and higher losses for insurance companies. 

The Federal Trade Commission (FTC) also completed an independent study, and they determined that credit-based insurance scores are effective predictors of future insurance risk.

So, when it comes to buying auto coverage, your driving history doesn’t affect your insurance score. However, your driving record is used to determine your final rates.

Things in your credit profile that might affect your score are:

  • Credit History Age
  • Number of Accounts in Good Standing
  • Number of On-Time Payments
  • Amount of Available Credit
  • Credit Mix

And guess what?

FICO, who is a significant generator of insurance scores and around 85 percent of home insurance companies, can only use insurance scores in states they are legally allowed when figuring out your level of risk.

Check out your department of insurance to see if they allow insurance scores.

If they do, there is a high probability that a score will be used to help determine your risk to an insurance company if you decide to purchase auto or home insurance.

Here’s the kicker: When it comes to coverage like disability insurance, you don’t have to worry about insurance companies pulling an insurance score.

Why? Because when it comes to life and health products, your health is usually one of the most critical factors that will determine your insurability.

The Best Way to Check Your Insurance Score

The good news is that three different companies offer insurance scores: FICO, Credit Karma, and LexisNexis.  

If you’re already a member of, then all you have to do is look through the different credit score options in the administrative area to find your homeowners insurance and auto scores.

For those looking for a freebie, Credit Karma offers a free insurance score for both auto and home.

You can also get a copy of your LexusNexus C.L.U.E. Report here.  

An insurance score is going to range from 150 to 950. The higher the score, the lower your risk to the insurance companies. If you find yourself with a 720 or higher insurance score, then you’re in luck because that’s a good score. Anything under a 580, however, isn’t considered excellent, and you should work on increasing it.

How to Improve Your Insurance Score

The fact of the matter is that if you want to get a better insurance score, then it’s pretty much the exact process that you would use to increase your standard credit score.

As your regular credit score goes up, you will also see an increase in your insurance score.

Now, the trick to increase your score is to: 

  • Pay all your bills on time
  • Keep your credit card utilization low
  • Have a good mixture of credit (i.e., revolving loans, credit cards)
  • Monitor your credit and dispute inaccuracies
  • Apply for a merchandise account and make on-time payments

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The Bottom Line

Managing your credit well will help you maintain a healthy insurance score, and if you haven’t established your credit, then you should try to increase your score fast

The faster you achieve a good credit score, the lower your overall interest rates will become in your life, and you can expect to have a lower insurance score as well. 

As you can see, becoming more responsible with credit is even more crucial than just obtaining a loan and paying it off. Other industries have taken note and use that data to determine how they will interact with you. Now, you know how to use it to your advantage. Trust me. It’ll all be worth it. 

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