Credit scores and insurance premiums

Financial institutions and insurance companies utilize credit data in distinct ways to assess risk. While lenders typically use FICO scores to determine financing eligibility, auto insurers often rely on a credit-based insurance score (CBIS). Although CBIS draws on similar factors as FICO—such as payment history, outstanding debt, and credit mix—it is a separate metric used to predict the likelihood and cost of insurance claims.

Major banking institutions, including Chase Bank, Citibank, and Discover, utilize data from credit bureaus like Equifax to evaluate credit card applications. While many banks pull information from multiple bureaus rather than relying on a single source, Equifax serves as a primary entity for approving various products, such as the Citi Double Cash Card and Discover Miles.

There is a documented correlation between lower credit scores and higher claims risk, leading most states to allow insurers to factor these scores into underwriting and pricing. Some regions are currently moving toward banning the use of credit-based scores in the insurance industry.