When most people think about credit scores, they picture things like applying for a loan, getting approved for a new credit card, or buying a car. But did you know your credit score can also affect how much you pay for insurance?
That’s right! Your credit history plays a bigger role in your insurance rates than you might think. Understanding how credit scores impact insurance premiums can help you take control of your finances and save money in the long run.
Insurance companies use something called a credit-based insurance score to help predict how likely a person is to file a claim. Studies show that people with higher credit scores tend to file fewer or smaller claims. Because of that, insurers often offer lower premiums to customers with good credit.
Here’s what that means in simple terms:
Higher credit score = lower insurance premiums
Lower credit score = higher insurance premiums
It’s not a judgment on your financial worth, it’s just one of many tools insurers use to assess risk. But it does mean that improving your credit can lead directly to lower rates on your auto, renters, or even homeowners insurance.
The good news? Your credit score isn’t set in stone. Here are a few small but powerful habits that can make a big difference over time:
Pay your bills on time
This is the single biggest factor in your score. Even one missed payment can set you back, so try using autopay or reminders.
Keep your credit card balances low
Experts recommend keeping your credit utilization below 30% — meaning if your credit limit is $1,000, aim to carry less than $300 at any given time.
Avoid opening too many new accounts at once
Each time you apply for new credit, it can cause a small, temporary dip in your score.
Check your credit report regularly
Mistakes happen. Use free annual credit reports to make sure everything listed is accurate.
Be patient and consistent
Credit improvement takes time, but small, steady steps will add up, and you’ll likely see that reflected in your insurance rates down the road.
If you’re shopping for new coverage or thinking about switching companies, your credit score could make a difference in the quotes you get. The stronger your credit, the more flexibility you’ll have in finding affordable, high-quality insurance.
That’s where working with an independent agency like Wells Insurance can help. We shop multiple carriers on your behalf to find the best balance between cost and coverage, no guesswork, no wasted time.
Improving your credit doesn’t just help with loans and credit cards. It can also mean paying less for your insurance, which is one of the easiest financial wins out there.
Learn more about how credit scores impact insurance premiums and explore ways to save on your coverage by Contacting us at Wells Insurance.