Does car insurance affect your credit score? Many drivers are unaware that their auto insurance policy can have an impact on their credit rating. While it is well-known that credit scores influence car insurance premiums—sometimes more than doubling them—the reverse relationship is less understood. The Independent spoke with several auto insurance experts to clarify how car insurance may or may not affect a credit score.
Past Due Payments and Credit Reports
Generally, payments made to lenders appear on credit reports, and timely payments contribute to about 35 percent of a credit score. However, insurance premium payments are not treated the same as loan or credit card payments, so they usually do not appear on a credit report. The main exception is when an account goes into default and is sent to a collections agency. According to Kasey Klenda, an attorney specializing in auto insurance claims, unpaid auto insurance can eventually show up on a consumer's credit report if it goes to collections.
Default and collections occur when a bill remains unpaid for three to six months. At that point, the insurer may transfer the account to a collections agency. If this happens, a driver's credit score could drop by 50 to 100 points or more, according to The Credit People. Such marks can remain on a credit report for up to seven years. A lower credit score leads to higher interest rates on loans. For example, a driver with a 620 credit score would pay $48,461 more in interest than someone with a 720 score on a 30-year, fixed-rate $400,000 mortgage with a 10 percent down payment, based on Experian data.
Premiums Create Financial Pressure
Another way car insurance affects credit scores is through the financial strain of premiums. Many consumers are struggling to make ends meet and using credit cards to cover everyday expenses. Maya Afilalo, an industry analyst at AutoInsurance.com, noted that 85 percent of drivers are worried about affording rising auto premiums. High premiums strain household budgets, increasing the likelihood of missed payments on other accounts.
John Espenschied, agency principal at Insurance Brokers Group, explained that when rates increase, consumers may have less money for credit cards, utilities, or medical bills, raising the odds of a missed payment. Payments that are 29 days late or less typically do not affect credit, but once a payment is 30 days late, it is likely to appear on a credit report, according to TransUnion. Rate increases have been particularly severe in Louisiana and Nevada, where premiums rose by over 100 percent from 2025 to 2026.
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