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Some Canadians take their vehicle insurance for granted. They just assume that it’s the same no matter who provides their insurance. Or where in Canada they may be. Many don’t realize that there are basic Canadian rules for insurance. There are also other rules that vary across the provinces.

One of the latest concerns that many have is how their credit score is going to affect their car insurance. There have been rumours that this does, in fact, take place. Some assume that this applies to everyone.

Every province has their own set of rules when it comes to insurance. Based on this there are some variances. In regards to whether credit scores are used to determine insurance costs.

Labrador Newfoundland and Ontario

In Labrador, Newfoundland and Ontario are not legal for using credit scores. As it applies to insurance companies using their credit score.


Insurance shoppers in Alberta are sometimes asked for permission to check their credit score. These individuals have the option of either giving permission. Or they can deny it. It may be that if they deny it may be possible the insurance company may deny giving them insurance.

British Columbia and Manitoba

Insurance is somewhat simplified in these two provinces. This is because it’s regulated by the province itself. Based on this there are no specific rules and regulations that pertain to the use of credit scores.

Nova Scotia and Saskatchewan

These Provinces have the full right to be able to look at a individuals credit score. They can use this information when setting their premiums.

Different Types of Credit Scores

A lot of individuals don’t realize that there are different types of credit reports.

Credit scores are based on points. They start from 300 and go all the way up to 900. With 900 being the best credit score possible. What’s considered to be an acceptable credit score is around 650. The scores may vary depending on the institution that they are taken from. The most common ones are Trans Union and Equifax.

Why Would an Insurance Company Do a Credit Check?


For those provinces allowed to do credit checks, they do so based on many factors.  Some Companies use this method in the insurance industry. They believe that the financial history or credit history is a good metric. It’s supposed to depict the level of responsibility that an individual has. Those with a poor credit history may by nature be a bigger risk for the insurance companies.  It is a presumption some insurance Companies make. There is speculation that those that have a bad credit end up with more claims. The provinces that are banning this feel that it is an unfair metric to use.

Credit Card Information

The credit information collected is from a lot of different components. These components used to come up with the score. Part of this is payment history and delinquencies. One can see why these would be important to insurance companies. Their business is based on the amount that they receive from their premiums. They expect premiums payment in full and on time when due. Individuals that have a poor payment history are not likely going to be good candidates. As clients for the insurance companies. The same with delinquencies.

On the other side of the coin insurance companies in most cases will cancel insurance that is not paid. They will do this almost immediately. So tthey arenot at any greater risk when it comes to their profit margins.


When one looks at the fairness of using a credit score, there are a lot of arguments raised against it. There are a lot of factors that can go into a credit score. Some that are not applicable to what the insurance needs to base their opinions on. The other issue is that there can be problems and errors with credit scores. It can give false information. It doesn’t seem fair that an insurance company can rely on information that may not be correct.

Looking at credit information can be confusing. There is the credit report which is the credit file, credit score, and credit rating.

What is a Good Credit Score for Auto Insurance?

It may not be clear what is a good credit score for insurance companies allowed to use this. Most likely they are going to go on the consensus of the midrange score as being what is acceptable. Being as they are using this for financial purposes. Then they are probably like-minded with financial institutions that use this information.

Does Good Credit Lower Car Insurance?

If an insurance company is relying on credit scores then it will have an impact on the cost of the insurance. Otherwise, they would not waste their time using this type of metric. However, every insurance company is different. It is difficult to determine how much emphasis they would put on this one form of information.

Individuals should be more astute at insurance shopping. Especially if the Company is using credit scores.

Asking Questions


For those living in provinces where it’s allowed, asking the proper questions is important. The insured individual has the right to know how much emphasis is put on the credit score. They also have the right to know whether the insurance company has used this metric. Either in the past or if they plan on using it in the future.

Focusing on good credit is important for many other aspects of life. Also focusing on viable insurance discounts is important. There are a lot of things that are in control for the drivers looking for insurance. They have control over the driving history that they are building. Also, they have control over who they want to buy their insurance from. Plus, they have control over being able to get quotes to help with insurance comparisons. Insurance shoppers also have the option to go to insurance companies offering excellent discounts.

Looking at all The Options


The bottom line is that there should never be one area of focus when one is shopping for insurance. It is not a good idea just to go with the lowest premium insurance offer because it’s the lowest. The same can be said that it is not wise to focus just on one’s credit score when shopping for insurance. Insurance companies use many different metrics. Insurance shoppers should also use many different resources. Using the best ones for getting the best insurance deals possible.

About the Author: Ashley Miller

Ashley is an insurance content professional and very knowledgeable on all related subjects. Ashley has over 12 years of insurance content writing experience working with various insurance companies throughout her career.