Many Canadians may be unaware that car insurance companies may use their credit scores as one of many factors to determine their auto insurance rates depending on the province in which they live. The practice is common in the United States and parts of Europe.

With the exceptions of Newfoundland and Labrador and Ontario, insurance companies in almost all other provinces tap an individual’s credit score when making auto rate risk calculations.

However, Ontario is mulling the possibility of permitting insurers to use consumer credit scores when determining a driver’s auto rate. No decision has yet been made, but the Insurance Brokers Association of Ontario is cautioning the provincial government from allowing the practice, since it could “negatively impact the availability and price offered to those who can least afford insurance”, including seniors, newcomers to Canada, the unemployed and single-income families. After all, a low credit score might translate into a high auto insurance premium if insurers deem people with poor credit a greater-than-average risk. Presently, insurers in Ontario may only consider credit scores when calculating home insurance premiums.

Meanwhile, Alberta has a partial restriction on the use of credit scores to determine car insurance premiums. Alberta auto insurers are not permitted to access a driver's credit score unless they've applied for a premium payment plan. If you live in Alberta and are concerned about paying more for car insurance because your credit score isn't the best, consider paying your policy in full without adopting a payment plan.

The Problem with Using Credit Scores to Determine a Driver’s Auto Risk

Insurance companies wish to use individuals’ credit scores when calculating auto rates because it may be an indicator for them to determine the level of risk a driver poses. Credit scores typically range between 300 and 900. The higher the score, the better your credit rating is. Part of the problem with insurers leveraging consumer credit scores to assess a driver’s risk, however, is the fact that there is no consistency or standard among credit rating firms when it comes to how they determine an individual’s creditworthiness.

Do Poor Credit Scores Indicate Higher Auto Insurance Risks?

Whether or not consumer credit ratings have any practical application for determining car insurance premiums, insurance companies contend there is a correlation between poor credit ratings and the risk of collisions and filing claims. The connection between the two being people who manage their overall finances well are more likely to keep their vehicles in tip-top shape and drive responsibly. It may be a valid argument, but it is also a contentious perspective.

Regardless, the Insurance Bureau of Canada (IBC) established a voluntary Code of Conduct for Insurers' Use of Credit Information to enhance consumer protection. IBC says its Code is supported by 85% of property and auto insurers across the country. Essentially, the Code encourages insurers to:

  • Obtain your consent to view your credit report
  • Take extraordinary circumstances into account (such as an illness or disability) when analyzing your credit report and score

IBC’s Code of Conduct prohibits insurance companies from:

  • Denying or cancelling insurance policies based solely on a poor credit score
  • Denying a policy because an applicant doesn't have any credit history

How Do I Check My Credit Score?

Since we’re on the topic of consumer credit reports and scores, you may be wondering how to go about reviewing your credit history and how credit reporting agencies rate you.

The two primary credit rating agencies operating in Canada are Equifax and TransUnion. Both will provide you with digital access to their records on you for a fee. You can also obtain a free paper copy of a consumer disclosure report (aka credit report) once a year. However, you are required to mail either agency a letter along with photocopies of two pieces of identification. It takes approximately three weeks for Equifax or TransUnion to respond to your written request.

More details on obtaining a free copy of your credit data are available on both Equifax’s and TransUnion’s websites.


The editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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