The Hidden Cost of Bad Credit: How Insurance Companies Are Judging Your Score

Why Your Credit Impacts More Than Just Loans and Cards

Written by Annalisha Ramsey

Most people don’t realize this: your credit score isn’t just about mortgages or credit cards—it’s quietly shaping how much you pay for things you already own. One of the biggest hidden costs? Insurance premiums.

Car, home, and even life insurers often use something called a “credit-based insurance score” to assess your risk. Even if you’ve never filed a claim, a low credit score can label you as “high risk,” resulting in premiums hundreds—or even thousands—of dollars higher than someone with excellent credit.

Here’s the kicker: these insurance scores aren’t the same as the FICO® or VantageScore® you see online. They’re proprietary formulas, often kept secret, that pull from your credit report to predict how “financially responsible” you’ll be as a policyholder.

This means that even if you pay every insurance bill on time, your credit can still cost you.

What You Can Do:

• Request an Insurance Score Disclosure: Some states allow you to see the credit-based insurance score insurers use.

• Dispute Errors Before Renewal: Clean up inaccuracies before policy renewal periods—they can trigger lower premiums.

• Leverage Positive Tradelines: Adding on-time accounts can improve how insurers view your financial reliability.

Improving your credit doesn’t just open doors to funding—it can lower everyday costs hiding in plain sight. At AT Legacy, we teach strategies most people never hear from their agents or banks, because we know every dollar saved fuels your legacy-building power.