Your car insurance score affects the price you pay for auto insurance. However, most drivers are unaware what their car insurance score is or how it works.
Today, we’re explaining everything you need to know about auto insurance scores, including how to check your score and what your score means.
Auto Insurance Scores Are Similar to Credit Scores
Your auto insurance score is a three-digit number calculated using information from your credit score. The goal of the car insurance score is to assess your risk as a car insurance policyholder.
An auto insurance score, also called a credit-based insurance score, works in a similar way to your credit score. In fact, your auto insurance score is largely based on your credit score: if you have a good credit score, then you most likely have a good car insurance score.
Some of the factors that go into an auto insurance score include:
- The age of your credit history (how long you’ve had or used credit)
- The number of accounts you have in good standing
- The number of payments you’ve made on time (and your number of late payments)
- How much of your available credit you’re using
Although the two ratings are similar, your auto insurance score is not the same as your credit score. The two typically have different score ranges.
Many drivers are surprised to learn that their car insurance score also has nothing to do with your driving record. Your driving record can influence your premiums, but your record does not influence your credit score.
Why is My Car Insurance Score Important?
In many states, car insurance companies will look at your car insurance score to set your premiums.
When you apply for car insurance, the insurance company will look at dozens of different factors to determine your risk as a policyholder. Your driving history plays an important role in determining your risk, as does your car insurance score.
Not all states allow insurers to use credit-based insurance scores to set policy rates. California, Hawaii, and Massachusetts, for example, all prohibit the use of credit-based insurance scores to set policy rates.
How Do Auto Insurance Scores Affect Insurance Premiums?
In most states, someone with a low credit score will pay more for car insurance than someone with a high credit score, all else being equal. The difference is significant.
On average, a driver with a poor credit score (300 to 579) will pay about $500 more per year for car insurance than a driver with a good credit score (670 to 739). A driver with an exceptional credit score (800 to 850), meanwhile, will pay just $700 per year for car insurance on average, while a driver with a poor credit score will pay $1,400.
In other words, your insurance premiums can double just for having a poor credit score.
What is a Good Auto Insurance Score?
The definition of a ‘good’ auto insurance score varies between reporting bureaus. FICO says anything over 700 is good, for example, while LexisNexis says anything over 776 is good. TransUnion doesn’t have a specific limit for ‘good’, although a higher number is always better.
When you request your auto insurance score from TransUnion or Credit Karma, you should get a breakdown of what your score means and how it compares to the scores of other drivers.
The scale varies year over year. The scale also varies between credit agencies. One agency may consider a score of 780 to be very good, for example, while another company may only consider that to be ‘good’.
850 and Above: Very Good
750 to 849: Good
620 to 749: Fair
450 to 619: Poor
449 and Below: Very Poor
As you can see, scores are similar to credit scores. Numbers in the 400s and 500s are generally considered poor, while numbers in the 600s are considered average. A score above 700 is considered good.
It’s important to check the scale specific to your auto insurance score. Some score systems are significantly different than the scale above.
How Do I Check My Auto Insurance Score?
Are you curious about your car insurance score? Are you wondering if your car insurance score is driving up insurance premiums? You may want to check your auto insurance score.
Unlike credit scores, you’re not entitled to a free auto insurance score every year. However, there are multiple ways to check your auto insurance score, including one free method.
The easiest way to check your credit score for free is to use Credit Karma, which pulls your score from TransUnion.
You can request your score from TransUnion directly, although you’ll need to pay a fee. You can also request your score through Equifax directly, although again, you’ll need to pay a fee.
Here are the three major auto insurance score providers and how to request an auto insurance score from each one:
Fair Isaac Corporation (FICO)
Auto Insurance Score: FICO Auto Score 9 XT
Score Range: 250 to 900
Credit Report Used: TransUnion
Cost: $19.95 Per Month (Requested as Part of FICO Essentials 1B Package)
Auto Insurance Score: LexisNexis Attract Auto Insurance Score
Score Range: 500 to 997
Credit Report Used: Equifax
Cost: $12.95 (One-Time)
Auto Insurance Score: CreditVision Auto Score
Score Range: 300 to 850
Credit Report Used: TransUnion
Cost: Unspecified (Contact TransUnion)
How to Improve Your Auto Insurance Score
If you have a bad auto insurance score, then you may want to improve that score. Even a small increase in your auto insurance score can save you 10 to 15% per year on car insurance premiums. Meanwhile, drivers with no credit will pay 70% more for car insurance than drivers with good credit.
Some of the best ways to improve your auto insurance score include:
- Pay bills on time
- Minimize your credit usage
- Pay off your credit card balances
- Monitor your credit score and credit history continuously
Ultimately, you can improve your auto insurance score just like you would improve your credit score.
Unlike with a credit score, however, you are not entitled to one free auto insurance score per year. However, you can still access a free car insurance score through CreditKarma or pay $13 to $20 for your LexisNexis or FICO report.
In all states except for California, Hawaii, and Massachusetts, insurance companies will use your auto insurance score – and dozens of other factors – to calculate your risk as a policyholder.