Jane Dotson
USAA does use credit scores as a factor when determining 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.
In some cases, your credit won't be used to determine your insurance premium. If you live in California, Hawaii or Massachusetts, your credit score isn't a rating factor. This is because these states' legislators feel that credit score evaluation may disadvantage low-income drivers.
| Characteristics | Values |
|---|---|
| Credit score used to determine insurance rates | Yes |
| Credit check impact on credit score | No |
| Credit score impact on insurance rates | Yes |
| States where credit score is not used to determine insurance rates | California, Hawaii, Massachusetts, Michigan, Washington |
| States where credit score is not allowed to determine insurance rates | California, Hawaii, Massachusetts |
| States where credit score is temporarily banned from determining insurance rates | Washington |
| States considering banning the use of credit scores to determine insurance rates | Colorado, Texas |
| States where justification for use of credit scores is required | Texas, Colorado |
| States where credit score is not a rating factor | California, Hawaii, Massachusetts |
| States where credit score evaluation may disadvantage low-income drivers | California, Hawaii, Massachusetts |
| States where credit score is used to determine insurance rates | All states except California, Hawaii, Massachusetts |
| States where credit score is used as a rating factor | All states except California, Hawaii, Massachusetts |
| States where credit score is not used as a rating factor | California, Hawaii, Massachusetts, Michigan, Washington |
What You'll Learn
USAA's use of credit scores
USAA does use credit scores as a factor when determining 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.
USAA 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.
In some states, a driver's credit-based insurance score is one of many things auto insurers consider in determining costs. However, California, Hawaii, Massachusetts, Michigan, and Washington do not allow the use of credit scores to determine car insurance rates. So, your credit score will not affect your rates with USAA in these states.
Specific things that USAA looks for in your credit history include bankruptcies, late payments, and foreclosures. These will likely result in higher premiums.
Your credit score is unlikely to ever be the sole reason that USAA denies you coverage or cancels your policy.
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.
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Credit scores and car insurance rates
In the US, most major insurers, including USAA, consider an individual's credit score when determining their car insurance rates. However, this practice is not permitted in all states. California, Hawaii, Massachusetts, and Michigan do not allow credit scores to be used in setting car insurance rates. In these states, insurers base rates on factors such as driving record, location, and vehicle type.
While credit scores can impact insurance rates, it is important to note that insurers also consider other factors, such as age, gender, marital status, vehicle type, and driving record. Additionally, getting a car insurance quote does not affect an individual's credit score, as insurers typically perform a "soft pull" of an individual's credit information, which does not impact their credit score.
Individuals can take several steps to improve their credit scores, such as paying bills on time, maintaining a low credit utilization rate, and regularly checking their credit report for accuracy. Improving credit scores can not only lead to better insurance rates but also enhance an individual's overall financial health and well-being.
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Credit-based insurance scores
Credit scores, on the other hand, are used by creditors to decide whether to approve credit applications and choose the terms of your account. Credit scores are based on the likelihood that someone will fall behind on their bills, whereas credit-based insurance scores predict the likelihood of filing claims that lead to losses for the insurance company.
- Payment history (40%)
- Outstanding debt (30%)
- Credit history length (15%)
- Pursuit of new credit (10%)
- Credit mix (5%)
While a good credit-based insurance score may result in a lower insurance rate, it's important to note that insurers are not allowed to use credit history as the sole reason for increasing rates or denying or canceling a policy. Additionally, some states, such as California, Hawaii, and Massachusetts, do not allow insurers to use credit scores to determine car insurance rates.
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Credit checks and car insurance quotes
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. While USAA does use credit scores as a factor when determining car insurance rates, it is not the only factor. Age, driving record, and the car's make and model are also taken into account.
USAA offers insurance to active military, veterans, and their families only. The company has affordable prices and strong customer service. It is available in all 50 states and Washington, D.C. USAA is rated highly for customer satisfaction and has some of the lowest sample rates for both full and liability-only coverage.
Credit-based insurance scores are used to determine how likely someone is to file a claim. These scores are based on credit history, just like a credit score. A low credit-based insurance score can affect car insurance rates more than a DUI in some cases. While using credit-based insurance scores to calculate rates is legal at the federal level, insurance companies typically cannot use credit history as the sole reason for increasing rates or denying or canceling a policy.
In conclusion, while credit checks are a factor in determining car insurance quotes, they are not the only factor, and there are other ways to find affordable car insurance, such as taking advantage of discounts or considering usage-based insurance.
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Credit scores and USAA car insurance rates
USAA 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.
In many states, a driver’s credit-based insurance score is one of many things auto insurers consider in determining costs. A low credit-based insurance score can affect your car insurance rates more than a DUI in some cases.
USAA 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 USAA denies you coverage or cancels your policy.
California, Hawaii, Massachusetts, Michigan, and Washington do not allow the use of credit scores to determine car insurance rates whatsoever. So, your credit score will not affect your rates with USAA in these states.
Specific things that USAA looks for in your credit history include bankruptcies, late payments, and foreclosures. These will likely result in higher premiums.
If USAA 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.
USAA's rates are well below average: A 40-year-old male with good credit and a clean driving record will pay an average of $1,709 a year for full coverage and $435 for minimum coverage. That's compared to a national average of $2,299 for full coverage and $637 for liability only. Your personalized quote may vary, however, based on your age, location, driving history, and many other factors.
People with speeding tickets and at-fault accidents typically pay more for insurance. USAA's rates are lower than typical for high-risk drivers, and it will also consider drivers with DUIs, which some insurers won't.
USAA offers many money-saving discounts. Not all are available in all states, and some policies may not be combined.
USAA offers potential discounts to help policyholders save on their car insurance. These include:
- Bundle and save (multi-policy discount)
- Military on-base discount
- Good student discount
- Clean driving record discount
- Safe driver discount
- Defensive driver training discount
- Basic driver training course discount
- Newer vehicle discount
- Anti-theft devices discount
- Deployment/storing discount
- Driving less discount
- Loyal member discount
- Multi-vehicle discount
- MyUSAA Legacy discount
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Frequently asked questions
Yes, USAA 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.
Historical data from the Federal Trade Commission shows drivers with poor credit file more claims than those with excellent credit, and that these drivers' claims are more costly to an insurer. As a result, people with no credit pay around 67% more for car insurance than people with excellent credit, on average.
You can lower your USAA car insurance costs by taking advantage of USAA discounts, opting for a higher deductible, and reducing your coverage, among other things.
