Many consumers believe that their driving record is one of the primary factors used to determine the premium for their auto insurance. Unfortunately, that is not true for many people. Consumer Reports conducted a two-year investigation, in which they analyzed more than two-billion car insurance price quotes from more than 700 companies in all general U.S. ZIP codes. They found that auto insurance companies are now using credit scores and other socioeconomic factors more than driving habits to determine premiums.

Only 3 states, California, Hawaii, Massachusetts, prohibit the use of credit scores in determining rates.

The credit scores that the auto insurance companies are using are not the familiar FICO scores, but are proprietary scores that you don't have right to see. These scores are developed using a subset of information in a credit report. They use these scores to predict how likely you are to file a claim and to determine how high your premium should be. Only 3 states, California, Hawaii, Massachusetts, prohibit the use of credit scores in determining rates.

Many auto insurance companies are also mining data about your shopping behavior to uncover trends that show your sensitivity to prices. They then use statistical models to determine how likely you are to shop for a better price. Price optimization, as this technique is called, is not allowed in California, Florida, Indiana, Maryland, Ohio, Vermont, Washington, Pennsylvania, Maine, and the District of Columbia.

What Can You Do?

Shop around for your auto insurance. Visit to compare customized insurance quotes. It uses the same independent data source that Consumer Reports used to conduct their study.

Review your credit report regularly to catch any errors. You are entitled to a free credit report each year from the 3 credit reporting agencies, Equifax, Experian, and TransUnion. Request your reports at

Whether your credit score is good or could use improvement, the "Credit Score" section on this site provides tips to help you keep your overall credit in good shape.

For More Information

Secrets of Car Insurance Pricing and Price Optimization Helps Car Insurers Figure Out Whether You're a 'Schmo' provide summaries of the investigations findings.

The Truth About Car Insurance is the full report with details on the proprietary credit scores, insuring teen drivers, myths and hidden truths.