Delaney Simchuk, Car Insurance Writer
@delaney_simchuk
Yes, State Farm does use your credit score as a factor when determining your car insurance rates, as do most major insurers. However, credit checks by auto insurers do not harm your credit score and are only done in states where it is legal for your credit score to affect your rates.
Many auto insurers use credit data to determine your premiums because there is a proven correlation between a lower credit score and a higher likelihood of filing an auto insurance claim. As a result, people with bad credit pay around 143% more for car insurance than people with good credit, on average.
Key Things to Know About How State Farm Uses Your Credit Score
- State Farm will assign you an auto insurance score, which is based on your credit history, just like your credit score. This auto insurance score could vary from one insurer to another since insurers may take different things into account.
- Your credit score is unlikely to ever be the sole reason that State Farm denies you coverage or cancels your policy.
- California, Hawaii, Massachusetts, and Michigan do not allow the use of credit scores to determine car insurance rates whatsoever. So, your credit score will not affect your rates with State Farm in these states.
- Specific things that State Farm looks for in your credit history include bankruptcies, late payments, and foreclosures. These will likely result in higher premiums.
- If State Farm has offered you a higher car insurance rate based on your credit history, you are legally entitled to a free copy of your credit report.
Keep in mind that your credit score is not the only factor used to determine your car insurance rates. Car insurance companies mainly take into account things like your age, driving record, and your car's make and model.
To learn more, check out WalletHub's report on credit scores and car insurance.
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