What is an insurance score — and how does is affect your rates?

Your credit history can impact how much you pay for insurance. Many of the same factors that determine your credit score are used to calculate your insurance score, a three-digit number providers use to predict the likelihood that you'll file a claim.

Here's what you need to know about your credit-based insurance scores, including how they're calculated, how they're used and how to improve yours to get a better rate.

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Actuarial studies suggest that how people manage their finances is a good indicator of how likely they are to file an insurance claim. So, in most states, insurance companies analyze your credit history to come up with your insurance score. (California, Hawaii, Maryland, Massachusetts, Michigan, Nevada, Oregon and Utah prohibit or greatly restrict insurers from using credit-based insurance scores.)

The actual number varies depending on which agency is providing data: TransUnion, for example, uses insurance scores that range from 300 to 900. The LexisNexis Risk Classifier, meanwhile, assigns a range of between 200 and 997.

People with lower scores are typically charged higher premiums. Both Progressive and State Farm have lower-than-average auto insurance rates for people with poor insurance scores.

Best known for its credit scoring model, FICO also has an algorithm to calculate insurance scores. It considers five factors, each assigned a different weight. 

• Credit history: 40%  
• Current level of debt: 30%
• Length of credit history: 15%
• New credit: 10%
• Credit mix: 5%

Another consideration is your history of claims: Many insurers incorporate information from your Comprehensive Loss Underwriting Exchange (CLUE) Report, which collects up to seven years of auto and personal property claims.

Insurance scores using the LexisNexis Risk Classifier range from 200 to 997. According to the company, a score of 770 or better is considered good and will get you favorable rates. A score of 500 or below is considered poor and could result in higher premiums or being turned down for coverage.

FICO and TransUnion don't make insurance scores available to consumers but you can ask your current or prospective insurer to provide yours. You can also reach out to LexisNexis and request your Consumer Disclosure Report.

While your insurance score isn't the same as your credit score, it's calculated using the same information. Someone with a high credit score likely has a high insurance score.

Your credit history typically accounts for 40% of your insurance score. So the easiest way to improve your score is by improving your credit.

A strong track record of on-time payments can boost your insurance score, as can lowering your ratio of outstanding debt to available credit and limiting the number of loan and credit cards you apply for. Products designed to improve your credit score, like *Experian Boost™, can also juice your insurance score.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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*Results will vary. Not all payments are boost-eligible. Some users may not receive an improved score or approval odds. Not all lenders use Experian credit files or use scores impacted by Experian Boost. Learn more.