Your credit information usually affects decisions in areas such as lending and housing in Canada. However, its use in auto insurance varies by province and type of coverage.
For this article, our team reviewed the Financial Consumer Agency of Canada’s guidance on how insurers may use credit information and car insurance, Ontario Regulation 664, and FSRA’s guidance on declined or terminated coverage.
Keep reading to learn when credit information may be requested, what Ontario prohibits, what to ask before consenting, how to dispute inaccurate data and why rules outside Ontario need a current regulator check.
Read More: See Why Car Insurance Rates Can Rise Without an Accident
Do Auto Insurance Companies Check Credit in Canada?
Ontario auto insurers cannot require consent to collect or use credit information before providing an auto quote or renewal, and cannot use credit information in an auto quote, application or renewal. Rules elsewhere in Canada vary by province, type of coverage and insurer.
Where provincial rules allow it, an insurer may request credit information only where permitted and under its process. Always ask for the purpose, bureau, consent wording, data used and consequences of declining.
The insurer may request a credit report, selected attributes or an insurance score calculated from credit information. Be careful on the consent wording to see exactly which data and inquiry type will be used.
What Insurers Can and Cannot Do With Your Credit Information
Where allowed, an insurer may use credit-based information as one factor in pricing or eligibility. It is used as a statistical factor and does not describe whether a person is irresponsible in their financial situation.
Provincial law determines when and how insurers can use credit information. An industry code may add extra consumer protections, but provincial law still takes priority.
- The consequence of declining consent can vary by jurisdiction and product, such as losing an optional discount instead of being denied. Get the consequence in writing and compare it with the provincial regulator’s rule.
- If an insurer subscribes to an applicable industry code, ask about special consideration after major life events and its evidence requirements. Provincial law remains controlling.
Refusing a Credit Check
Here are what you can ask before consenting:
- Is this for mandatory or optional coverage?
- What law and approved rule permit it?
- Is the result a discount, underwriting factor or rating factor?
- Which report/insurance score is used?
- Is consent optional?
- What happens if I decline?
- How can I review and dispute inaccurate data?
You may decline consent, but ask what exact consequence follows:
- Is there no effect?
- Do I lose an optional discount?
- Is there another permitted outcome?
Get the answer in writing and contact the provincial regulator if it conflicts with local law.
How Your Credit Score Affects Car Insurance
There is no single Canadian rule. Ontario prohibits specified credit factors in auto rating, while rules elsewhere depend on the province, coverage and insurer.
Credit Score Checking for Car Insurance Across Provinces
Ontario’s rule is clear. Auto insurers and their representatives cannot require consent to collect or use credit information before providing a quote or renewal, and they cannot use credit information when handling an auto quote, application or renewal.
Rules outside Ontario vary. Newfoundland and Labrador, for example, prohibits credit information in risk classification for private passenger automobiles. If you live elsewhere, use the Canadian Council of Insurance Regulators’ jurisdiction links to find the current provincial or territorial regulator, then confirm whether the insurer may request credit information, what it may use and what happens if you decline.
Other Factors Influencing Car Insurance Rates
For an Ontario quote, factors such as your driving record, vehicle, location, use, coverage and deductibles are more relevant. Elsewhere, ask whether credit’s permitted and actually used.
Here are factors that influence your car insurance rates, according to the IBC :
- Your car’s make, model, production year, and safety features.
- Personal details like your age, gender, and marital status.
- Your driving history, including any previous insurance claims and driving convictions. Things like speeding tickets and licence suspensions may raise your premiums. Your history of driving courses may also be considered.
- How long you’ve had a driver’s licence.
- Your annual driving mileage.
- Your car’s usage, whether it’s just for personal use or if you use it commercially.
- If a credit report is inaccurate, request a free copy, identify the disputed entry and follow the credit bureau’s correction process. Building credit is a separate financial task. It does not change Ontario’s prohibition on using credit information for auto quotes, applications or renewals.
If you have multiple people on your auto insurance policy, their details will also figure into your premium calculations.
Read More: Learn More About What Impacts Your Car Insurance in Ontario