Will My Credit Score Change My Insurance Rates in California?

I was recently asked this question by one of our clients here in Mission Viejo, and thought I would share the answer for our readers.

There are a lot of things that go into homeowners and auto insurance rates. In many states, credit is one of them. California is different.

Does credit affect auto insurance rates in California?

No. Under Proposition 103, which California voters passed in 1988, insurers can’t use your credit score to set your personal auto insurance rate. Instead, California law requires auto rates to be based mainly on three factors, in this order of importance:

1. Your driving safety record
2. The number of miles you drive each year
3. Your years of driving experience

Insurers can use other factors the Department of Insurance approves, such as the type of car you drive, but the three above have to carry the most weight. California also requires insurers to give a Good Driver Discount of at least 20% to drivers who qualify.

What about homeowners insurance?

Credit-based insurance scores are generally not part of homeowners rating in California either. Your home insurance price is driven much more by things like the age and condition of your roof, your wildfire risk score, rebuilding costs, and your claims history.

So does my credit matter at all?

It can in a few places, such as some commercial insurance, payment plans, or financing your premium. And good credit is still worth having for your mortgage, car loan, and everyday finances. But if your credit score went up, it won’t automatically lower your personal auto or home insurance rate in California.

What actually lowers your rate here?

• A clean driving record. Tickets and at-fault accidents usually affect your rate for three years.
• Driving fewer miles. If you stopped commuting to the Bay Area or now work from home, tell your agent. Lower mileage can mean a lower rate.
• Bundling home and auto with the same carrier.
• Shopping your policy. Rates vary a lot between carriers, and an independent agent can compare them for you.

If it’s been a while since anyone looked at your rate, give us a call. We hope this was helpful!