What is an Insurance Credit Score?

Credit: one of those oft-stressful adult considerations that we were blissfully ignorant of as children. Besides being useful when buying a car, house, or securing any other type of loan, did you know that credit is sometimes a factor in your car insurance premium? One key difference: your insurance credit score is not the same as the consumer credit score you might be more familiar with. 

If you’re scratching your head at this one, well, you’re not alone. Today we’re covering what an insurance credit score is, how it affects your car insurance rate, and how it differs from your consumer credit score.

What is an insurance credit score?

In short, an insurance credit score is a number that helps auto insurance companies predict how likely you are to have a future accident or insurance claim. This three-digit number calculated using information from your credit report, such as the age of your credit history and how many accounts you have in good standing.

How does this number differ from my consumer credit score?

Many consumers believe they have one true credit score, but this actually isn’t the case. Instead, there are several scoring models that each produce different numbers. This means your FICO score won’t exactly match your TransUnion Vantage 3.0 score (to use two common models), even though both are built from the data on your credit report.

Your insurance credit score will be different still; it also starts with your credit data but crunches the numbers differently to focus on factors that are important to insurers. Comparing a consumer credit score to an insurance credit score is comparing apples to oranges––they’re quite different and may not even use the same scale to display results. It would be a very big coincidence if the scores matched exactly!

How does my insurance credit score affect my car insurance premiums?

It’s tough to speak in absolutes when it comes to credit; every driver is different, your insurance credit score is just a small piece of the puzzle, and not all states allow insurers to consider credit history (notably, California does not allow it). But it definitely can impact rates.

According to The Zebra’s The State of Auto Insurance Report for 2019, drivers with poor credit scores (579 or less) have an average insurance premium of just under $3,000, while drivers with exceptional credit scores (800 or higher) pay only about $1,250 on average — a 58% savings. Improving your credit score several tiers, such as from fair to excellent, can lower your rates by up to 70%.

The Bottom Line

Remember, a credit score is just a shorthand that speaks to your credit history. And there are several different versions of these shorthands!Our goal at Metromile is to give our customers — with poor credit, great credit, and everything in between — greater control over their car insurance bill. By and large, they seem to appreciate it! Sound interesting? It only takes minutes to get your personalized quote.

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Julianne Sawyer is a freelance writer, app producer, and real-life Metromile customer living in the San Francisco Bay Area.