These scores are different from the type of credit score lenders and banks look at when you apply for a loan or credit card. Both look at similar factors, such as your payment history and how much debt you have, but weigh them differently.
In a traditional credit scoring model, “good” credit includes scores from 690 - 719, but it’s hard to say what a “good” credit-based insurance score is, because each insurer determines that on its own. Still, if you have a decent credit score, the insurance version is likely on par.
Having good credit likely means you’ll get cheaper rates. Why? Insurance companies say research shows that consumers with good credit-based insurance scores are less likely to file expensive or frequent claims. Because of this, insurers charge them lower rates.
These scores are used in tandem with other factors like age, gender, and car make and model to calculate auto insurance rates in the 46 states where the practice is allowed.
Despite widespread use, many consumers don’t know insurers use credit to set rates.
“People don’t get that insurers look at them as a walking risk profile,” says Amy Bach, executive director of United Policyholders, a nonprofit that advocates for insurance consumers. “They look at them much deeper than a regular vendor would,” Bach adds.