How Your Credit Score Impacts Car Insurance Premiums in Canada

Your Credit Score Could Be Costing You Hundreds on Car Insurance

Did you know your credit score affects your car insurance? Most people in Edmonton and Alberta don’t realize this. That three-digit number can add hundreds of dollars to your car insurance bill every year.

You might be asking: “Does my credit score really affect my car insurance rates?” The answer is yes—in most parts of Canada. Let’s explain how this works and what you can do about it.

What Is a Credit-Based Insurance Score?

Insurance companies don’t look at your regular credit score. They use something called a credit-based insurance score.

This score comes from your credit report. Credit bureaus like Equifax and TransUnion create it. Here’s what they look at:

• Do you pay bills on time?
• How much debt do you have?
• How long have you had credit?
• What types of credit do you use?
• Have you applied for new credit recently?

Insurance companies believe this score shows how likely you are to file a claim. Studies show people with lower scores tend to file more claims. That’s why insurers care about it.

Does Credit Score Affect Car Insurance in Alberta?

Good news for Alberta drivers! Alberta has special rules about credit scores and car insurance.

Insurance companies CAN check your credit in Alberta. But they need your permission first. You can say no. And if you say no, they cannot deny you coverage.

What Alberta Drivers Are Paying

Car insurance costs are rising in Alberta. The average cost is now $1,703 per year. That’s about $142 per month.

Rates went up by 8.63% in the last year. With costs this high, you need to understand everything that affects your rate. Your credit score is one of those things.

How Credit Score Impacts Car Insurance Across Canada

The rules are different in each province. Here’s what you need to know:

Where Credit Score CAN Affect Your Rate:

• Alberta – They need your permission first
• Nova Scotia – They can ask but can’t deny you coverage
• Saskatchewan – Credit scores may be considered
• British Columbia – Limited use in private insurance
• Manitoba – Some consideration allowed

Where Credit Score CANNOT Affect Your Rate:

• Ontario – Completely banned for car insurance
• Newfoundland and Labrador – Completely banned

The Insurance Brokers Association warns that using credit scores hurts people who can least afford insurance. This includes seniors, newcomers to Canada, and single-income families.

Why Do Insurance Companies Check Your Credit?

This is a fair question. What does paying your credit card have to do with driving?

Insurance companies say credit scores help them understand risk. Their research shows drivers with lower credit scores are more likely to:

• File insurance claims
• Have accidents more often
• Miss insurance payments
• Let policies expire

But many people disagree with this. Consumer groups say it’s unfair. They argue it punishes people who had money troubles through no fault of their own. Think about job loss or medical emergencies.

How Much Can Bad Credit Increase Your Car Insurance?

The impact can be big. Really big.

In provinces that allow credit-based pricing, poor credit can raise your rate by 20-50%. This happens even if you’re a great driver.

Real Example:

Two drivers in Calgary. Both are 35 years old. Both have:

• Clean driving records
• Same car (2020 Honda Civic)
• Same coverage
• Same neighborhood

Driver A (Excellent credit: 800+): Pays $1,600/year Driver B (Poor credit: 580): Pays $2,400/year

That’s $800 more per year just because of credit score.

Easy Ways to Improve Your Credit Score

Good credit helps in many ways. It can lower your car insurance. It helps you get loans and mortgages. It can even help you rent an apartment.

Here’s how to boost your credit score:

Simple Steps That Work:

• Pay every bill on time
• Keep credit card balances low (under 30% of your limit)
• Don’t close old credit cards
• Check your credit report once a year for mistakes
• Don’t apply for too many credit cards at once

Better credit takes time. But the savings on car insurance alone can be hundreds of dollars per year in Edmonton and Alberta.

What Else Affects Your Car Insurance Rate in Alberta?

Credit score is just one factor. Here are the others:

Your Driving Record

This matters most. Good drivers in Alberta get special rate caps. But tickets and accidents will cost you.

Your Age

Young drivers under 25 pay more. Experienced drivers get better rates.

Your Vehicle

Some vehicles cost more to insure. In 2020, Alberta had 19,215 vehicles stolen. Popular trucks like the Ford F-150 are stolen often. High-theft vehicles cost more to insure.

Where You Live

Edmonton drivers pay different rates than rural Alberta drivers. This depends on local accident rates and theft statistics.

Your Coverage Amount

More coverage costs more. But it protects you better.

How Much You Drive

Drive more miles? You’ll pay more. More driving means more risk of accidents.

How to Get Cheap Car Insurance in Edmonton

Worried about your credit affecting your car insurance? Here’s what to do:

1. Compare Quotes with Reliant Insurance

Never take the first quote you get. At Reliant Insurance, we work with many insurance companies. We find you the best car insurance rates in Edmonton and Sherwood Park. We do the comparing for you.

2. Ask About Credit Checks

In Alberta, you control this. Ask how your credit affects your quote. Ask what happens if you don’t share your credit info.

3. Control What You Can

You can’t fix credit overnight. But you CAN:

• Drive safely and avoid tickets
• Take a defensive driving course
• Bundle home and car insurance together
• Choose a higher deductible
• Add anti-theft devices to your car

4. Work with Local Experts

Reliant Insurance has served Edmonton for over 25 years. We know Alberta insurance inside and out. We know which companies care less about credit scores. We’ll help you get fair rates.

What’s Next for Credit Scores and Car Insurance?

This topic is still being debated. Consumer groups say using credit scores is wrong. Insurance companies say it helps them price fairly.

Alberta is changing its auto insurance system. The new system starts January 1, 2027. Drivers could save $400 per year. We don’t know yet if this will change how credit scores are used.

Your Questions Answered

Can they check my credit without asking?

No. They must ask you first. You can always say no.

Will shopping for quotes hurt my credit?

No. Insurance quotes use “soft checks.” These don’t affect your score.

Can I be denied insurance for bad credit?

No. Not in Alberta or anywhere in Canada. Bad credit can’t stop you from getting coverage.

How often do they check my credit?

Usually just once when you apply. They don’t keep checking while you have the policy.

What if my credit improves?

Great! Call Reliant Insurance. We’ll shop for better rates for you.

Save Money on Car Insurance Today

Your credit score matters. But it shouldn’t stop you from getting fair car insurance rates. At Reliant Insurance, we help everyone get affordable coverage.

Our Edmonton and Sherwood Park brokers will:

• Compare rates from many insurers  
• Explain how credit affects your quote
• Give you honest, friendly service

Get your free car insurance quote now!

Call: 1-833-463-2115 

Visit: reliantinsurance.ca 

We serve Edmonton, Sherwood Park, and all of Alberta

What You Need to Remember

Your credit score can change what you pay for car insurance in Canada. But rules are different in each province. In Alberta, companies need your permission to check your credit. You can say no.

You can’t fix credit fast. But you can work with smart insurance brokers like Reliant Insurance. We’ll find you the best rates no matter what your credit looks like.

Car insurance is required in Alberta. But overpaying isn’t required. Take control today. Understand what affects your rate. Work with local experts who care about you.

Frequently Asked Questions

Q1: Does my credit score affect my car insurance in Edmonton?

Yes, it can. In Alberta, insurance companies can look at your credit score. But they must ask you first. You can say no. If you say no, they still have to give you coverage. Different companies care about credit differently. That’s why comparing quotes helps. Call Reliant Insurance to compare rates.

Q2: What credit score do I need for good car insurance rates?

A score above 700 is considered good. This can help you get lower rates. Scores below 650 might mean higher rates. But this only matters in provinces that allow credit-based pricing. The best way to get good rates? Pay bills on time and keep debt low.

Q3: Can I get car insurance with no credit history?

Yes! No credit history is different from bad credit. New immigrants often have no credit. Young people might have no credit. You can still get car insurance. Insurance companies will look at other things instead. Like your driving record and vehicle type. Reliant Insurance helps newcomers all the time.

Q4: How do I lower my car insurance with bad credit?

You have options. Keep a clean driving record. Raise your deductible. Bundle home and car insurance. Take a driving course. Install anti-theft devices. Shop around often. At Reliant Insurance, we find companies that focus less on credit. We focus more on your driving history.

Q5: Will my insurance company tell me if they check my credit?

Yes. They must ask permission first. When you apply for car insurance, they’ll ask you to consent. This is usually a “soft check.” It won’t hurt your credit score. You can always say no.

This blog provides general information. For personal car insurance advice in Edmonton and Alberta, contact Reliant Insurance at 1-833-463-2115 or visit reliantinsurance.ca.