Which States Restrict the Use of Credit Scores in Determining Insurance Rates?

Male Motorist Involved In Car Accident Taking Picture Of Damage For Insurance Claim

In most states, insurance companies can use credit-based insurance scores to help them make decisions about who to insure and how much to charge. These scores are based on your credit report and are designed to predict how likely you are to file a claim that will lead to a loss for the insurer.

State insurance regulators generally don't allow insurance companies to use a credit-based insurance score as the sole reason for a decision. Instead, your credit could be one of many factors an insurance company considers when determining if it wants to offer or renew a policy (underwriting) and how much to charge in premiums (rating).

However, some states go further in limiting how, when and if insurance companies can use your credit information at all. States generally haven't passed laws restricting its use for life insurance purposes, although that may change as the use of credit-based insurance scores has rapidly increased in the last few years. But here's a list of the states that place stricter rules on the use of credit data and credit-based insurance scores for auto and homeowners insurance policies.


Insurance companies in California don't use credit-based scores or your credit history for underwriting or rating auto policies, or setting rates for homeowners insurance. As a result, your credit won't impact your ability to get or renew a policy, or how much you pay in premiums.


Hawaii bans the use of credit ratings when setting standards, including underwriting standards and rating plans, which determine your premiums. Your credit can, however, impact your homeowners insurance.


In Maryland, homeowners insurance companies can't refuse you coverage, cancel a policy, refuse to renew your policy or base your insurance rates on your credit history—or lack thereof. Auto insurers can use your credit history to help determine your rates on a new policy, but can't use it to deny your initial application, cancel a policy, refuse to renew your policy or increase your premiums during a renewal.


Massachusetts law forbids auto insurance companies from using credit information or credit-based insurance scores when setting rates, underwriting a new policy or renewing an auto policy. Homeowners insurance rates also can't be based on your credit.


Insurance companies in Michigan can't use your credit or a credit-based insurance score as part of their decision-making process to deny, cancel or refuse to renew an auto or homeowners policy.


In Oregon, insurance companies can't cancel a policy or refuse to renew a policy because of your credit. They also can't decline your initial application based solely on your credit, and there's a limit on which information in your credit report can be used to underwrite and rate your policy.


Similar to in Oregon, in Utah, insurance companies can use your credit information when initially underwriting an auto policy, but it can't be the only factor used to make the decision. Once you've been a customer for 60 days, the company can't use your credit information to cancel or refuse to renew your policy, or decline coverage for a new vehicle that you or select household members own. Auto insurance companies can also only use credit information to offer you a discount on your premiums, not charge you more. And, once in place, they can't remove the discount based solely on a change in your credit.


In response to the COVID-19 pandemic, Washington state has adopted a temporary rule that prevents insurance companies from using credit information to adjust the rates or premiums of insurance policies such as auto, homeowner or renter insurance.

There was concern among policymakers that some citizens would have their rates increased because of missed payments or defaults related to the pandemic showing on their credit reports. This rule took effect in March and will last until three years after the federal or state emergency declarations end, which may give residents time to recover from the financial effects of the pandemic.

Improving Your Credit Can Help Lower Your Premiums

If you live in a state that does allow insurance companies to consider your credit standing, improving your credit can help you lower your rates. By and large, credit-based insurance scores are based on similar factors that influence your credit scores, which means doing things like paying bills on time and keeping credit card balances low can help you improve both types of scores. Learn ways to improve your credit scores to save on your insurance premiums. Monitoring your credit with Experian can help you keep an eye on your credit report and address any issues as quickly as they arise.