Does Paying Car Insurance Build Credit?

Learn how paying insurance with a credit card can potentially affect your credit score


It might feel like every recurring payment you make has the potential to affect your credit score. But your car insurance might not necessarily be one of them.

This doesn’t mean your credit score and car insurance aren’t related. If you’re paying for coverage with a credit card, making your card payments on time and in full may indirectly build credit. Car insurance companies may also use your credit score as a factor when determining your rate. If you have a good credit score, you could end up receiving a better rate than someone with a lower credit score.

Paying Car Insurance With a Credit Card

Making payments for car insurance won’t affect your credit score. But if you pay with a credit card, things like your card’s balance or late payments could be reported to the credit bureaus.  

And most major insurers do accept credit cards as a form of payment. Just remember that using your credit card responsibly is what ultimately has a positive impact on your score.

Things To Ask Your Car Insurer

Before you commit to paying your car insurance with a credit card, check to see whether your insurer charges a processing or convenience fee. 

You may also want to explore your options for how often payments can be made. Many insurers let you make payments monthly, biannually or annually. If you pay your car insurance annually, you might be able to avoid processing fees. While if you pay monthly, those fees can add up. 

Things To Remember If Paying With a Credit Card

When it comes to how car insurance payments can affect your credit score, be mindful of your credit utilization ratio. That’s simply a measurement of how much of your available credit is currently in use.  

The Consumer Financial Protection Bureau (CFPB) recommends keeping your credit utilization ratio under 30%. So if paying your car insurance with a credit card puts the total amount of credit you’re using over the 30% mark, you may want to consider another payment method.

You’ll also want to make sure you make your credit card payments on time. As the CFPB explains, your payment history is an important part of your credit score. And missed or late credit card payments can not only affect your credit—they can lead to late fees and interest rate increases, too.

Missing a Car Insurance Payment

Regardless of whether you’re paying with a credit card, missing a car insurance payment can have consequences. 

Depending on your insurer’s policy, missed payments may result in late fees or policy cancellation. Some insurers don’t offer grace periods for missed payments, meaning you could lose your insurance if you don’t pay on time. 

Worried about a missed car insurance payment directly affecting your credit score? Generally, there’s no need to be. Car insurance companies aren’t extending credit when they charge premiums, so they typically don’t report your payment history to credit bureaus. 

However, if you fail to pay your insurer, they may be able to turn the debt you owe them over to a collection agency. And the collection agency may report that debt to the credit bureaus.

Other Ways To Build Credit

Making your car insurance payments on time and in full is important, whatever payment method you choose. 

Remember, you won’t build credit just by making your car insurance payments. But using a credit card to pay those insurance premiums can have an indirect impact. Just remember it’s the responsible use of your credit card that can have a positive effect on your credit score. 

But there are also ways you can build your credit, even without a credit card. Becoming an authorized user on someone else’s credit card account, applying for credit builder loans, and using personal loans responsibly may help improve your credit score. 

Monitor Your Credit

A good way to stay on target with your credit score goals is to monitor your credit. With CreditWise from Capital One, you can check your credit score for free, at any time, without hurting your score. The best part? You don’t even have to be a Capital One customer to use it. 


Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.

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