Does paying car insurance build credit?

No, simply paying for car insurance doesn't help you build credit. But, if you pay your monthly car insurance premiums on time and with your credit card, it could improve your credit score.

Kara McGinleyAndrew Hurst


Kara McGinley

Kara McGinley

Editor & Licensed Home Insurance Expert

Kara McGinley is an editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN,, and elsewhere.

&Andrew Hurst

Andrew Hurst

Senior Editor & Licensed Auto Insurance Expert

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

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Even if you pay your car insurance on time each month, it won't help you build credit. But, since your insurer doesn't report to your credit bureau, your credit also won't take a hit if you make a late payment. However, if you pay your premiums with your credit card, your car insurance payments could indirectly affect your credit score.

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When you shop for car insurance, insurance companies typically check your credit score in order to help calculate what the cost of your car insurance premium will be. These inquiries won't affect your credit score, either, so your credit won’t change even if you get quotes from lots of companies.

Key takeaways

  • Paying your car insurance premiums on time doesn't help you build credit, but missing payments doesn't hurt your credit either. 

  • If you use your credit card to pay your insurance premiums, you could improve your credit as long as you pay down your credit card balance every month.

  • Although car insurance payments don't affect your credit, insurance companies do consider your credit when determining what you'll pay for coverage.

Does paying car insurance build credit?

Unlike with loan payments, paying your car insurance premiums cannot improve your credit score. And buying car insurance won’t affect your credit either — car insurance companies will do what’s called a "soft inquiry" to check your credit when you shop for coverage. That means that it doesn't have any impact on your credit — even if you get quotes from more than one insurer. 

If you want to indirectly improve your credit score with your insurance, you could consider paying for your auto coverage with a credit card. Like any purchase you make with credit cards, the paying for car insurance will add to your monthly balance. As long as you pay your credit card bill on time, you could improve your credit score. 

It's essential that you make your credit card payments on time if you decide to use a credit card to make your insurance payments. By making late credit card payments, you risk having to pay interest on your account, which can be as high as 20%.

Do insurance companies report to credit bureaus?

No, insurance companies don't report to credit bureaus. Credit agencies won't know if you make all your car insurance payments late or on time, and your credit won't be affected either way. Instead, national credit bureaus evaluate your borrowing history — like your loans, revolving credit sources, and debt — to determine your credit score.

Will not paying car insurance affect credit?

If you stop paying your car insurance premiums, your credit score won't be affected. However, you could face late fees from your insurer and eventually lose your car insurance coverage altogether. When your policy is canceled and you experience a lapse in coverage, your rates will go up in the future. 

While not paying your car insurance won't affect your credit, your credit could influence how much you pay for car insurance. If you have a poor credit history, insurance companies view you as more likely to file a claim in the future. As a result, your rates will be more expensive than someone with better credit — often by more on average than what you'd pay if you received a speeding ticket or were involved in an accident.

Unpaid car insurance doesn't go on your credit and make your credit score worse, but forgetting to pay your credit card bill after using your card to pay your insurance premiums will. Paying your car insurance on your credit card could also mean extra fees and more expensive car insurance in the future.

Can I pay my car insurance with a credit card?

Yes, most major car insurance companies give you the option of paying your car insurance premiums with a credit card. You can pay with a one time charge to your credit card, or you can set up automatic payments from your credit card.

If you don't have a credit card or prefer to pay your premiums another way, you can also pay your insurance premiums with:

  • Cashier's or personal check

  • Electronic transfer (EFT)

  • Debit card

  • Interactive Voice Response (over the phone)

Most insurers allow you to pay your car insurance monthly, bi-anually, or annually. Some car insurance companies will charge a fee if you use a credit card, however most insurers offer a discount if you pay your car insurance in full at the start of your policy term. 

→ Read more about the pros and cons of paying for your insurance with a credit card

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Frequently Asked Questions

Does canceling car insurance hurt credit?

Canceling your car insurance doesn't hurt your credit, but it's still not a good idea if you don't have another policy. If you go uninsured, you would have a lapse in coverage on your record and pay more for insurance in the future.

Can unpaid car insurance go to collections?

While your unpaid car insurance could go to collections, it's more likely that your insurance company would just cancel your policy if you missed too many payments. Some insurers have late payment grace periods, so they won't cancel your coverage right away following a missed billing period.

What types of payments help credit?

While paying your insurance doesn't help you build credit, you can improve your credit history by making other payments on time. Paying off your credit card and making on-time payments to your student loan lender, mortgage lender are other great ways to improve your credit.