By Brandon Thompson, MBG Insurance | Updated August 2026
If you’ve ever gotten an auto or home insurance quote and wondered why your rate looks different from a neighbor’s — even with similar coverage — credit is often part of the answer. It’s one of the more misunderstood factors that goes into pricing, so let’s break down what it actually means for you.
Yes, credit plays a role — in most states
Insurance companies use what’s called a credit-based insurance score, which is different from the credit score your bank or credit card company looks at. It’s built from your credit report but weighted specifically to predict the likelihood of a future claim, not your ability to repay a loan.
In Missouri and Arkansas, insurers are permitted to use credit-based insurance scores when pricing auto and home policies. That’s not the case everywhere — California, Hawaii, Massachusetts, and Michigan currently ban the practice outright for auto insurance, and a handful of other states restrict how it can be used. If you’re insuring property in one of those states, this may not apply to you. But for MO and AR policyholders, it’s a real factor carriers are allowed to weigh.
It’s not the same as a credit “pull”
A common misconception is that getting an insurance quote will ding your credit the way applying for a credit card or mortgage does. It won’t.
When an insurance company checks your credit, it’s a soft inquiry — the same type of check you’d see when a company pre-approves you for an offer. Soft inquiries don’t appear on your credit report to other lenders and don’t affect your score. A hard inquiry (which does affect your score) only happens with things like loan or credit card applications.
When does your credit actually get checked?
Insurers typically check credit:
- When you first request a quote
- When you initially bind a policy
- Periodically at renewal, though this varies by carrier and isn’t usually done every single term
That means if your credit score improves, your insurer won’t necessarily know right away — it may take a renewal cycle or two before that improvement is reflected in your rate. The reverse is also true: a temporary dip in your score won’t necessarily hit your policy immediately either.
Why does credit correlate with insurance pricing at all?
This is the part people find frustrating, and it’s a fair reaction. Insurers aren’t judging your character — they’re relying on statistical studies showing that, in aggregate, credit-based insurance scores have historically correlated with claim frequency and severity. Whether that’s a fair basis for pricing is a legitimate policy debate, and it’s one several states are actively having right now — bills to limit or ban the practice have been introduced recently in states like New York, Oklahoma, Pennsylvania, and Iowa. But as of today, it remains a standard, legal rating factor here in Missouri and Arkansas.
What you can actually do about it
You can’t opt out of credit being used as a factor where it’s permitted, but you do have some control:
- Check your credit report for errors. Free reports are available annually at annualcreditreport.com — an error dragging your score down is more common than people think.
- Pay down revolving balances. Credit utilization is one of the most heavily weighted factors in most scoring models.
- Don’t assume one insurer’s rate reflects your only option. Because credit weighting varies by carrier, the same credit profile can produce very different quotes from company to company. This is exactly where working with an independent agency helps — we’re not stuck offering you one company’s formula.
The bottom line
Credit is one piece of a much larger pricing puzzle that includes your driving record, claims history, coverage limits, and property characteristics. If your credit has improved since you last shopped your policy, or if you’ve never had it reviewed against multiple carriers, it may be worth a second look. As an independent agency, we shop your coverage across the carriers we represent rather than pricing you through a single company’s model — reach out and we’re happy to take a look.
Have questions about what’s driving your premium? Contact MBG Insurance or request a quote to see how your coverage compares across carriers.
About the Author
Brandon Thompson is CEO and co-founder of MBG Insurance (Millennium Brokers Group), an independent insurance agency serving Missouri and Arkansas. A Certified Work Comp Advisor (CWCA), Brandon specializes in workers’ compensation, high-value home, lessor’s risk, and tree care risk coverage. He leads MBG’s Bentonville, Arkansas office. Read Brandon’s full bio.