A credit-based insurance score is a number built from your credit report, but it answers a different question than the score a lender uses. A lender’s score predicts whether you’ll repay a loan. An insurance score predicts how likely you are to have an insurance claim. Where state law allows it, auto and home insurers use it as one factor next to your driving record, claims history and the property itself. It can’t be built from your income, race, religion or where you live. If it leads to a denial or a higher charge, federal law says you get a notice. Some states ban or limit its use. In states that follow the NCOIL model act, and under laws like Michigan’s, you can ask for an exception after a hardship like a serious illness or a job loss.
What it is and how it differs from a credit score
The NAIC describes a credit-based insurance score as a rating that relies partly or entirely on information from your credit history. The two are built for different jobs: in the NAIC’s words, traditional credit scores predict loan repayment, while insurance scores predict the likelihood of an insurance claim.
The NAIC’s consumer guide lists the credit-report categories FICO weighs: your payment history, how much you owe, how long you’ve had credit, new credit you’ve applied for, and your mix of credit types. Where it’s allowed, the NAIC says the score is typically one of many inputs, next to claims history, driving record, property characteristics, location, coverage limits and deductibles.
What the score can’t use
According to the NAIC, a credit-based insurance score can’t use personal information such as:
- Who you are: race, color, national origin, religion, gender, marital status and age.
- Your money and work: income, occupation and employment history.
- Other personal details: where you live, the interest rates you’re charged, child or family support obligations, rental agreements, certain credit inquiries, and whether you’re in credit counseling of any kind.
The NCOIL model act, a template state legislators can adopt, also says certain items can’t count against you: inquiries you didn’t start, inquiries you made for your own credit report, insurance-related inquiries, collection accounts coded as medical, and repeat mortgage or auto-loan inquiries made within 30 days of each other, unless only one is counted. Michigan’s law uses the same list.
If it costs you: the adverse action notice
The federal Fair Credit Reporting Act counts a denial or cancellation of insurance, an increase in any charge for it, or a reduction or unfavorable change in coverage as an “adverse action.” When an insurer takes one based on a consumer report, 15 U.S.C. 1681m requires it to notify you and to give you:
- The name, address and phone number of the credit bureau that supplied the report.
- A statement that the bureau didn’t make the decision.
- Notice of your right to a free copy of your report from that bureau if you ask within 60 days, and your right to dispute anything inaccurate or incomplete.
Some states add to this. Washington requires a written notice stating the significant factors in your credit history or score that led to the action. Michigan requires clear, specific reasons, up to four factors, and says a phrase like “poor credit history” isn’t specific enough.
Where it’s banned or restricted
Not every state allows the score. Some allow it only for certain lines, such as auto and homeowners, and others for any type of insurance. Examples from the statutes:
- Hawaii (auto): the state’s motor vehicle insurance law says no insurer may base any standard or rating plan, in whole or in part, directly or indirectly, on a person’s credit bureau rating.
- Massachusetts (auto): under Chapter 195 of the Acts of 2011, insurers can’t refuse to issue or renew private passenger auto insurance based on credit information, including a credit-based insurance score, and can’t file auto rates based on it. It’s codified at M.G.L. c. 175E, s. 4.
- Michigan: insurers can’t use credit information or an insurance score in any part of a decision to deny, cancel or nonrenew a personal policy, and since 2019 can’t use an individual’s credit score to set auto rates or rating classifications.
- Washington: insurers can’t cancel or nonrenew personal insurance, which includes auto and homeowners, based in whole or in part on credit history or an insurance score, and can use credit history to deny coverage only together with other substantive underwriting factors.
Hardship exceptions and re-rating
The NCOIL model act requires an insurer that uses credit to offer reasonable exceptions, on your written request, when one of these events directly affected your credit:
- A catastrophe declared by the federal or state government.
- Serious illness or injury to you or an immediate family member.
- Death of a spouse, child or parent.
- Divorce, or involuntary interruption of legally owed alimony or support.
- Identity theft.
- Temporary loss of employment for 3 months or more after an involuntary termination.
- Military deployment overseas.
The insurer may ask for documentation and may require the request within 60 days of the application or renewal. Once it has enough documentation, it has 30 days to tell you the outcome. Michigan’s law adopts this list and adds foreclosure tied to predatory lending. The model also lets you ask at annual renewal to be re-rated on a current credit report or insurance score, though the insurer doesn’t have to pull a new one more than once in 12 months.
Check your credit report before you shop
Mistakes on your credit report carry over into the score. The FTC says AnnualCreditReport.com is the only site authorized to fill orders for the free reports federal law gives you, and the three nationwide bureaus have permanently extended free weekly reports there. You can also order by phone at 1-877-322-8228. If something is wrong, dispute it with the bureau and with the business that reported it.
Under the NCOIL model, if a dispute shows a current customer’s credit information was wrong, the insurer has 30 days after notice to re-underwrite and re-rate, and must refund any overpayment back to the shorter of the last 12 months or the policy period. More on the policies: auto insurance and homeowners insurance.
Common questions
Is an insurance score the same as my credit score?
No. Both draw on your credit report, but a credit score predicts loan repayment, while an insurance score predicts the likelihood of an insurance claim.
Does checking my own credit hurt my insurance score?
Under the NCOIL model act and Michigan’s law, inquiries you make for your own credit information can’t be used as a negative factor. Rules vary by state.
Can an insurer turn me down only because of my credit?
The NCOIL model act bars denying, cancelling or nonrenewing a personal policy solely on credit information without considering another underwriting factor. Some states go further: Michigan bars using credit in any part of a decision to deny, cancel or nonrenew, and Washington bars cancelling or nonrenewing based in whole or in part on credit.
What if I don’t have a credit history?
Under the NCOIL model act, an insurer can’t hold a missing credit history against you unless it treats you as having neutral credit, rates you on other criteria only, or uses a treatment the state regulator has approved.
What should I do after an adverse action notice?
Request your free report from the bureau named in the notice within 60 days and dispute any errors. If a hardship like a serious illness or job loss hurt your credit and your state follows the NCOIL model or has a law like Michigan’s, ask the insurer in writing for an extraordinary life circumstances exception.
Sources
- NAIC consumer insight (July 22, 2020): credit-based insurance scores aren’t the same as a credit score
- NAIC insurance topic page: credit-based insurance scores (updated March 2026)
- 15 U.S.C. 1681a (Cornell LII): FCRA definitions, including adverse action
- 15 U.S.C. 1681m (Cornell LII): duties of users taking adverse action
- Hawaii Revised Statutes 431:10C-207: prohibited discriminatory practices
- Hawaii Revised Statutes 431:10C-101: Article 10C is the Hawaii motor vehicle insurance law
- Massachusetts Acts of 2011, Chapter 195 (approved November 22, 2011): credit in auto underwriting and rating
- Massachusetts General Laws Chapter 175E, Section 4: no auto rates or refusals based on credit information
- Michigan Compiled Laws 500.2151: definitions (credit score, insurance score, personal insurance)
- Michigan Compiled Laws 500.2153: use of credit information
- Michigan Compiled Laws 500.2154: reasonable exceptions for life events
- Michigan Compiled Laws 500.2156: adverse action notice
- Michigan Compiled Laws 500.2162 (2019 Act 21): credit score and auto rates
- RCW 48.18.545 (Washington): credit history and insurance scores in personal insurance
- NCOIL Model Act Regarding Use of Credit Information in Personal Insurance (readopted November 15, 2025)
- FTC consumer advice: free credit reports (updated June 2026)
General information about credit-based insurance scores as of October 2026, not legal or tax advice; federal law and each state’s insurance statutes and regulations control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.