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Canceling your car insurance is unlikely to directly affect your credit score. Insurance companies do not report policy cancellations to credit bureaus. However, there are some indirect ways in which it could impact your credit score. Let’s explore whether canceling insurance can affect your credit score and what factors may come into play.

Potential indirect effects of canceling car insurance on your credit score

  • Unpaid premiums – If you have any outstanding premiums when you cancel your policy, your insurer might send the unpaid amount to collections, and that could negatively impact your credit score.
  • Coverage gaps – Cancelling without having a new policy in place could lead to a gap in coverage. If you get into an accident during this period, it might result in financial difficulties that indirectly affect your credit score.
  • Credit-based insurance scores – In some states or regions, insurers use credit-based insurance scores to determine premiums. If you cancel multiple policies or frequently change insurers, it might be perceived as instability, potentially affecting future insurance rates.

Best practices to cancel car insurance

Follow these best practices to avoid affecting your credit score

  • Pay premiums on time –  Ensure you pay your insurance premiums on time to avoid any issues with collections and credit score impact.
  • Plan ahead – If you’re considering canceling, have a new policy in place to avoid coverage gaps and financial risks.
  • Shop wisely – When looking for new insurance, obtain quotes without affecting your credit score using soft inquiries.


While canceling car insurance directly does not impact your credit score, it’s essential to be mindful of potential indirect effects like unpaid premiums and coverage gaps. Pay your premiums on time, plan ahead, and choose insurance options wisely to maintain a healthy financial standing.