You can get car insurance if you have bad credit, although it will likely cost more than if you had good credit. We found that drivers with a bad credit score face car insurance rates that are more than twice as expensive compared to drivers with excellent credit. COUNTRY Financial and GEICO typically offer the cheapest insurance premiums for drivers with bad credit histories. Rates are as low as $877 a year from COUNTRY Financial and $906 a year from GEICO. Even among the cheapest policies, insurance for drivers with bad credit is 83% higher, or $472 more per year, compared to drivers with excellent credit.
Besides improving your credit, you have a few options to get the best cheap car insurance with bad credit. First, compare quotes from several insurance companies to find an affordable one. You should also consider car insurance companies that do not consider credit ratings, although that doesn’t necessarily mean you’ll pay less.
This article touches on:
- Cheapest car insurance companies for bad credit
- How your credit impacts your car insurance rates
- Auto insurance companies that don't check your credit score
Cheapest car insurance for drivers with bad credit
COUNTRY Financials’ $73 a month rate makes the insurer the cheapest option for drivers with poor credit. That’s followed by GEICO, which charges an average $76 a month, or $906 a year, for drivers with bad credit.
| Insurance company | Poor credit | Average credit | Excellent credit |
|---|---|---|---|
| COUNTRY Financial | $877 | $754 | $631 |
| GEICO | $906 | $609 | $456 |
| Farm Bureau | $908 | $501 | $454 |
| Allstate | $924 | $725 | $678 |
| State Farm | $955 | $552 | $450 |
| Nationwide | $1,185 | $974 | $852 |
| Progressive | $1,196 | $824 | $623 |
| American Family | $1,238 | $915 | $734 |
| Auto-Owners | $1,294 | $720 | $507 |
| Average annual rate | $1,044 | $707 | $572 |
| Average rates are for a 12-month policy with minimum coverage. Rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary. | |||
By choosing the cheapest car insurance company in our study (Country Financial) compared to the most expensive insurer in our study (Auto-Owners), drivers may save an average $417 per year. That’s why it’s a good idea to compare quotes from several car insurance companies, especially if you have poor credit.
Does my credit score affect my car insurance rates?
Yes, your car insurance rates are influenced by your credit score. Our research found that having a bad credit score can double your insurance premium in some cases. From the quotes we reviewed, a driver with poor credit pays $87 per month for car insurance. A driver with excellent credit, on the other hand, only pays $48 a month.
Although it may seem unrelated, insurers have determined that your credit score has a high correlation with the likelihood you’ll file an auto insurance claim. It's a major factor in your insurance score. This is a controversial practice, however, and it's been outlawed in several states. According to Experian, these states currently regulate the practice:
Car insurance is more expensive for drivers with bad credit
Full coverage car insurance for drivers with bad credit were 120% to 185% more expensive than rates for drivers with excellent credit — saving drivers with excellent credit more than $2,100 on average annually.
You don’t need to boost your credit score much to potentially find significant savings. We found that increasing your credit rating from the poor to below fair could result in saving 29% to 45% on your premiums. Rates vary greatly based on many factors, so make sure to shop around for quotes to see what your cheapest auto insurance premiums could be.
Bad credit doesn't have to mean bad car insurance rates.
We can help you find cheap insurance.
Car insurance with no credit
You don’t need credit to be able to get car insurance, but you may be rated like a driver with below-average credit. If an insurer cannot find a credit rating for you, you’ll most likely have higher rates than someone with good credit, but lower rates than someone with very poor credit.
Auto insurance companies that don’t check your credit score
Usage-based or non-standard car insurance companies may not check your credit score. Both nonstandard car insurance and usage-based car insurance tend to be limited in the areas they serve, and many still check credit scores. For example, usage-based insurers, like Root Insurance or Metromile, aren’t available in all states.
Most insurers use your credit score to help determine your auto insurance premium, so the market for no-credit-check car insurance is limited. Even if you do find a cheap, no-credit-check car insurance company, its auto insurance policies may not necessarily be cheaper or a better fit for someone with poor credit. A car insurance company that doesn’t check credit scores may be more expensive than a standard insurer because they know less about their customers and therefore need to have higher premiums to absorb that heightened risk.
To find your best options, you should first shop around for quotes for drivers with bad credit in the standard insurance market. After that, consider non-credit-based insurers, such as usage-based car insurance companies.
Improving your credit score to get cheap car insurance
Working to improve your credit can be a good move to get cheaper premiums if you currently have a low credit score. Any increase, even if it’s modest, can lead to a decrease in insurance premiums. Here are some tips to improve your credit score:
- Make payments on time for any debt you have, such as loans and credit cards.
- Try to use less than 30% of your total credit limit. For instance, if you have a $2,000 credit limit, try to put less than $600 on your credit cards in total.
- Don’t open too many new credit card accounts in a short period of time.
- Check your credit report periodically to make sure it is correct.
If you have no credit, you’ll need to start building credit to potentially save on your auto insurance premiums. Try to open up a line of credit. Some credit cards may accept a sparse credit history. You can also build credit by getting a credit card that requires a security deposit, or become an authorized user on someone else’s credit card.
Methodology
We gathered rates for one base driver across three states: Texas, New York and Illinois. We set our base driver profile as a 30-year-old man with a clean driving history. The driver owns a 2012 Honda Accord and selects the required minimum liability coverage auto insurance policy. He drives 15,000 miles annually.
For each state, we analyzed data across all providers that had data publicly available through Quadrant Information Services. Because each insurer calculates their insurance credit score differently, we use standardized tiers of credit that are consistent across companies. For our purposes, you can fall into one of five categories: excellent credit, good credit, no credit rating found, below fair credit and poor credit.
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