Auto & Driving
Does Improving Your Credit Score Lower Insurance Costs?
Estimates based on Insurify, Insurance.com, and Experian 2025-2026 data.
In most states, yes, and the effect is bigger on home insurance than most people expect. Here is what moving up a credit tier is actually worth.
Data sourced from Insurify, Insurance.com, Experian
Why credit correlates with insurance risk at all
This is the part that surprises people who assume credit score should only matter for loans. Insurers' own claims data has found a statistical correlation between credit-based scores and how likely a policyholder is to file a claim, independent of driving record or home condition.
Whether that correlation reflects genuine risk behavior or something else entirely is a long-running policy debate, but the pricing effect on the ground is real and is exactly why four states have stepped in to ban or restrict it as a rating factor.
What moving up a tier is actually worth
For auto insurance, moving from poor credit to good credit saves an estimated $499 a year, and moving from good to excellent saves a further estimated $250, for a full poor-to-excellent gap of about $749 a year.
The good and fair tiers used here are a straight-line estimate between the directly published excellent and poor figures, not independently sourced numbers, so treat the exact midpoint savings as directional rather than precise.
For home insurance, the full poor-to-excellent gap runs to roughly $6,041 a year, considerably larger than the auto-insurance gap. If you are working on your credit for other reasons, a mortgage application, a lower interest rate, the home insurance savings are a real, if secondary, benefit worth factoring in.
The size of this gap is genuinely disputed
Independent studies of the credit-insurance gap do not agree with each other. Some report a narrower percentage difference between the best and worst credit tiers than the figures used here, others report a much wider dollar gap using different score cutoffs and different baseline assumptions.
That is a documented inconsistency in this specific corner of insurance pricing research, not a sign that any one study got it wrong, and it is a good reason to get quotes from more than one insurer rather than assuming every company will price a given credit tier the same way.
The fastest way to erase this entirely
Improving your credit score takes time and is not guaranteed to move at any particular pace. If you already live in California, Massachusetts, Hawaii, or Michigan, part or all of this factor may not apply to your premium at all regardless of your credit.
See the state comparison of credit-based insurance scoring for the specific line-by-line breakdown of what each of those four states does and does not restrict.
Frequently asked questions
How much could improving my credit score actually save me?
Moving all the way from poor to excellent credit saves an estimated $749 a year on auto insurance and roughly $6,041 a year on home insurance, nationally. Moving one tier at a time saves less at each step.
Treat these as directional estimates rather than a guarantee, actual savings depend on your specific insurer and state.
Is credit score used the same way for home insurance as auto?
The concept is the same, insurers use it as a rating factor correlated with claims likelihood, but the size of the effect is not the same. The gap between excellent and poor credit runs far wider for home insurance than for auto insurance in this data, meaning a credit score improvement can move the needle more on a home premium than an auto premium.
Do all insurers use credit scoring the same way?
No. Different insurers weight credit-based scores differently, and independent studies of this exact gap disagree meaningfully on its size, some report a narrower percentage difference between top and bottom tiers, others report a much wider dollar gap using different score cutoffs and methodologies.
That inconsistency itself is a documented finding, not a data error, so shopping multiple insurers matters more here than for some other rating factors.
What if I live in a state that bans credit-based scoring?
Then improving your credit score will not move your insurance premium at all, since insurers there are not permitted to use it as a rating factor in the first place.
See the state-by-state comparison of credit-based insurance scoring to check whether your state is one of the four with a ban or restriction.