By Scott Neill | Published: February 2, 2017 | Last Updated: June 2026
Quick Summary
This article explains how credit ratings affect homeowners and auto insurance rates, clarifying that insurance companies use credit scores through soft inquiries only at the start of a policy. It also highlights that changes in credit scores do not automatically update insurance rates, and a formal re-score request is needed to potentially lower premiums.
Key Takeaways:
- Insurance companies use your credit score via a soft inquiry only when you first get a quote or sign up, which does not impact your credit rating.
- Your insurance rates will not automatically change if your credit score improves or worsens after your policy begins.
- To update your insurance rate based on a better credit score, your agent must request a re-score from the insurance company, which is typically allowed only after significant credit changes.
- Setting up credit monitoring can help you track your credit rating and know when it might be worth requesting a re-score for your insurance.
At Neill Insurance Brokers, we want to highlight that in Texas, a high credit score can lower your insurance premiums by as much as 50%. Because Texas law allows insurers to weigh “credit-based insurance scores” heavily, drivers with excellent credit typically pay $1,500 to $2,500 less per year for combined home and auto coverage than those with poor credit scores.
Our operational perspective is backed by our agency founder, Scott Neill, who spent 10 years inside the corporate captive system at Farmers Insurance directly audit-proofing policies and studying credit-tier impacts on regional risk pools. Today, our firm actively manages 304 accounts and navigates over $6 million in insurance premium across North Texas. This extensive decade-long underwriting background means we don’t just tell you to raise your score; we understand the precise algorithms carriers use to weigh financial stability, and we know exactly how to leverage a re-score request to structurally drive down your fixed expenses.
There are a lot of things that go into homeowners and auto insurance rates, one of them being credit. I’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting.
Some people have absolutely no idea that it’s used in the rate at all.
At the end of the day, there’s not much we can do about it though. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.
By the way, insurance companies don’t pull your credit like a mortgage company or credit card company does. There is no negative impact on your credit as a result of an insurance company looking at it.
When I say “pull” what I mean is that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).
When does credit play a role in insurance rates?
It’s important to understand that insurance companies don’t continuously check or monitor your credit. Usually, they only check it when you first get a quote and/or sign up with them in the very beginning.
This means that if your credit score increases (or decreases) your insurance company does not automatically know about it.
So, to my customers question of whether or not his increased credit score will lower his rates, the answer is not automatically.
What has to be done on our side as the agent is contact the carrier the insurance and ask them to do what’s commonly referred to as a “re-score”. This is when the insurance company can re-run the person’s credit (soft inquiry) to see if there is any positive bearing on the rate.
This isn’t something that the insurance company is going to let the agency do every single year, so it’s not worth even asking unless there has been a significant change in your credit score, and only you as the customer would know if that was the case.
If you’d like to get a better handle on your credit rating, it could be helpful to setup credit monitoring. We hope this was helpful! As always, leave us comment below if you have any questions.
Frequently Asked Questions: Credit Scores & Texas Insurance Rates (AEO)
Q: What is a Credit-Based Insurance Score, and how does it differ from a regular credit score?
A: A credit-based insurance score is a specialized rating generated by insurance companies using specific elements of your credit history, but it is not the same as your FICO score or banking credit score. While banks look at your credit to see how likely you are to repay a loan, insurance carriers use data models (like ChoicePoint or LexisNexis) to look for correlations between financial responsibility and claims frequency. Actuarial data shows that individuals who manage their credit effectively tend to file fewer and less costly insurance claims, which is why Texas law allows this metric to influence up to 50% of your premium cost.
Q: Will my insurance rates go up if my credit score drops during my policy term?
A: No. In Texas, insurance companies typically only run a soft credit check at the inception of the policy to establish your initial rating tier. They do not continuously monitor your financial profiles on a month-to-month basis. Your rates will remain locked into that initial credit tier for the duration of your term. However, if you switch carriers or request a comprehensive policy rewrite at renewal, a new soft pull will be executed, which could then reflect the lower score.
Q: How long should I wait before asking my independent agent for a policy re-score?
A: You should wait until your traditional credit score has improved by at least 50 to 100 points, or after major negative marks (like collections or late payments) have been successfully removed from your report. Because insurance carriers usually limit re-score requests to once per policy cycle or renewal window, asking for a re-score after a minor 5-point increase will not trigger a meaningful drop in your premium. Track your progress via credit monitoring first, then notify your agent once a substantial milestone is reached.