You pay your premiums on time. You have never filed a claim. You drive the speed limit and lock your doors at night. So why does your neighbor — with the same car, same house, same coverage — pay hundreds less than you every year?
The answer might have nothing to do with your driving record or your home's roof age. It might be hiding in your credit report.
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In 46 states — including Utah — insurance companies use your credit history to calculate what you pay for auto and homeowners insurance. And the impact is staggering: drivers with poor credit pay an average of 98% more for full coverage than those with excellent credit. For Utah drivers specifically, that gap translates to roughly $1,860 more per year just for car insurance.
If that number surprises you, you are not alone. Most people have no idea their credit score affects their insurance rates. Let's change that.
What Is a Credit-Based Insurance Score?
First, an important distinction: your credit-based insurance score is not the same as your FICO score or VantageScore. While those scores predict whether you will repay debt, an insurance score predicts how likely you are to file a claim.
Insurance companies use data from your credit report — things like payment history, outstanding balances, and length of credit history — and run it through proprietary models to generate a score. The two most common models are LexisNexis Attract and FICO Insurance Score.
Here is what makes up your credit-based insurance score: Payment history (40%) — Late payments, collections, and bankruptcies hurt you the most. Outstanding debt (30%) — High credit card balances relative to your limits signal risk. Credit history length (15%) — Longer histories work in your favor. New credit inquiries (10%) — Too many recent applications can lower your score. Credit mix (5%) — Having both revolving credit and installment loans helps.
How Much Does Bad Credit Actually Cost You in Utah?
The numbers are eye-opening. In Utah, a driver with good credit pays about $126 per month for full coverage auto insurance. A driver with poor credit? $281 per month. That is $155 more per month, or $1,860 per year — for the exact same coverage on the exact same vehicle.
The impact on homeowners insurance is equally significant. Nationally, homeowners with poor credit pay 30% to 60% more in premiums. On an average Utah homeowners policy of around $1,400 per year, that could mean an extra $420 to $840 annually.
If you have both auto and homeowners insurance with poor credit, you could be overpaying by $2,280 to $2,700 every single year compared to someone with good credit. Over a decade, that is $22,800 to $27,000 in unnecessary premiums.
Why Do Insurance Companies Use Credit Scores?
Multiple actuarial studies, including those by the Federal Trade Commission and the National Association of Insurance Commissioners, have found a statistical correlation between credit history and the likelihood of filing insurance claims. People with lower credit scores tend to file more claims than those with higher scores.
Critics counter that the practice disproportionately impacts low-income households and communities of color. This debate is ongoing — several state legislatures considered bills in 2026 to restrict or ban the practice. Currently, four states — California, Hawaii, Massachusetts, and Michigan — prohibit insurers from using credit scores entirely. Utah allows credit-based scoring but has some consumer protections in place.
5 Proven Ways to Improve Your Insurance Score
The good news: improving your credit-based insurance score by just one tier — say, from fair to good — can save you an average of 17% or more on your premiums.
1. Pay every bill on time. Payment history is the single biggest factor at 40%. Set up autopay for at least the minimum payment on every account. 2. Pay down credit card balances. Keep your utilization below 30% of your limit. 3. Do not close old credit accounts. Length of credit history matters — keep old cards open with small recurring charges. 4. Limit new credit applications. Space them out by at least six months. 5. Check your credit report for errors. One in five consumers has an error. Pull your free reports from AnnualCreditReport.com and dispute any mistakes.
Shop Around — Not Every Insurer Weighs Credit the Same
Different insurance companies weigh credit differently. Some carriers charge up to 417% more for drivers with poor credit. Others place less emphasis on credit. This is exactly why working with an independent insurance agent matters — they can compare rates across multiple carriers to find the one that gives you the best deal based on your full profile.
FAQ: Credit Scores and Insurance Premiums
Does checking my own credit score lower my insurance score? No. Checking your own credit is a soft inquiry and has zero impact. How often do insurance companies check my credit? Most insurers check at application and at each renewal (every 6 or 12 months). Can I be denied insurance because of my credit? In Utah, insurers cannot deny coverage based solely on credit. Does my income affect my insurance score? No — income is not a factor. If I improve my credit, will my rates drop automatically? Not automatically, but they should drop at your next renewal when the insurer re-checks your credit.
Ready to find out if you are overpaying? Take our free insurance quiz at theinsurancebox.com/quiz to get a personalized recommendation, or book a free consultation at theinsurancebox.com/book with one of our licensed agents. We will compare rates across multiple carriers and find you the best deal — no matter where your credit stands today.