The Impact of Credit Scores on Non-Standard Auto Insurance Rates in Texas

Texas insurance companies are permitted to use credit information when calculating auto insurance premiums. This includes both standard and non-standard policies. A credit-based insurance score is not the same as a traditional credit score used by lenders. It is derived from similar data, such as payment history, outstanding debt, length of credit history and types of credit used.

For drivers in the non-standard category, a low credit score can compound existing risk factors. If you already have a less-than-perfect driving record, a poor credit score may further increase your rates. Improving your credit score over time can help reduce your premiums, even if you remain in the non-standard market.

Texas law does place limits on how insurers can use credit information. For example, companies cannot base their entire decision on credit alone. They must also consider other underwriting factors. Additionally, insurers must make reasonable exceptions for consumers whose credit was negatively impacted by life events such as job loss, divorce or identity theft.

Why it Matters for Non-Standard Policies

Due to the higher perceived risk, non-standard auto insurance is often more expensive than standard coverage. When credit scores are factored in, the cost can rise even further. This is particularly relevant in Texas, where credit scoring in insurance is widespread and regulated but still impactful.

For example, two drivers with identical driving records and vehicles may receive very different quotes if one has a high credit score and the other has a low one. This disparity can be especially frustrating for drivers working to improve their driving habits but are still penalized for past financial difficulties.

It’s also worth noting that not all insurers weigh credit scores the same way. Some may emphasize credit more than others, so comparing quotes from multiple providers is essential. If you’re in the non-standard market, shopping around can reveal significant differences in how your credit score affects your rate.

Contact Us

Contact Lone Star Insurance Agency to learn more about how your credit score may affect your non-standard auto insurance rate, or to explore your coverage options.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.