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How Can I Get the Best Cheap Car Insurance With Bad Credit?

Shopping around for quotes with non-standard insurers and usage-based insurance can save bad credit drivers hundreds.

bad credit

You can get car insurance if you have bad credit, although it will likely be more costly than if you had good credit. We found that GEICO and Allstate typically offer the cheapest insurance premiums for drivers with bad credit histories across our research; rates were as low as $1,374 and $1,407 for GEICO and Allstate, respectively. In general, car insurance premiums for drivers with bad credit ratings were 146% more, or $2,100 more on average, than premiums for drivers with excellent credit.

We found that some car insurance companies have policies that do not depend on credit ratings. Usage-based car insurance companies, or auto insurance providers that base your rate on how you drive, typically do not factor in credit scores. However, these policies may not necessarily be cheaper for drivers with low credit scores or no credit history.

Companies price your premiums based on how risky of a driver you are, so rates that use less information about you are more risky for an insurance company. As a result, premiums may be higher —- potentially higher than rates with companies that do check your credit.

In this article we will touch on…

Does my credit score affect my car insurance rates?

The short answer is yes, your car insurance rates depend on your credit score. Our research found that having a bad credit score can nearly triple your insurance premium in some cases. If you have excellent credit, you’ll most likely have lower car insurance rates compared to an equivalent driver with poor credit. Even though 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.

car insurance premiums by credit score

However, in California, Hawaii and Massachusetts your car insurance company cannot use your credit rating as a factor in determining your auto insurance premium.

Car insurance companies check your credit report but use your insurance credit score to determine if you’re a high-risk driver. An insurance credit score is different than your credit score. The factors that go into your standard credit score are weighted differently when composing your insurance credit score, meaning the two measures can vary significantly. In general, things like late payments affect your credit rating. Extreme events like filing for bankruptcy can seriously impact credit and potentially your insurance credit score.

Although your credit score does affect your car insurance rates, shopping around for insurance quotes will not affect your credit score. When you get a quote, a company does a soft pull on your credit score, which has no negative consequences for you.

Car insurance is much more expensive for drivers with bad credit

We found that auto insurance premiums for drivers with bad credit were 120% to 185% more expensive than for equivalent drivers with excellent credit — saving drivers with excellent credit over $2,100 on average annually. The worse your credit score, the higher your auto insurance premiums are likely to be. Drivers with excellent credit, on the other hand, tend to be rewarded with the cheapest auto insurance rates. Having poor credit can more than double your auto insurance premiums, even if you have a good driving record.

But you don’t need to increase your credit score by much to potentially find significant savings. We found that boosting your credit rating from having the worst credit rating 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.

car insurance premiums for poor credit

No-credit auto insurance

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 or if you don’t have any credit built up, you’ll most likely have higher rates than someone with good credit. But your auto insurance premiums shouldn’t be as high as someone with a very poor credit score. Across all three states, we found that drivers with no credit ratings have slightly cheaper rates than those with below-fair credit scores, but more expensive insurance rates than those with good or excellent credit.

car insurance premiums for no credit

Even if you have good credit, you’ll still pay more than those with excellent credit scores. In our research we found having good credit instead of excellent credit can lead to a 16% to 19% increase in premiums.

Cheapest car insurance companies for drivers with bad credit

Relatively affordable rates are available for those with bad credit. Across our research sample, we found the cheapest car insurance rates for people with bad credit to be $1,325 annually. Let’s look at how major car insurance providers factor in credit scores into your annual premiums across three states.

Cheapest auto insurance for drivers with bad credit in New York

In New York, for our sample driver, we found the small provider Republic-Franklin Insurance to be the cheapest car insurance company for drivers with bad credit. GEICO is the cheapest major insurer for drivers with bad credit in New York. These rates are for illustration only. Your rates may vary.

Car insurance company in NY Annual premiums for drivers with 'worst' credit
Republic-Franklin Insurance $1,792
GEICO $2,012
Chubb $2,284
USAA $2,562
Allstate $2,606
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Cheapest auto insurance for drivers with bad credit in Illinois

In Illinois, GEICO again offers the cheapest rates to drivers with very bad credit, with a $114.50 monthly premium. Country Preferred and SECURA are only a dollar or two more expensive monthly and are close runners up to the sample rates from GEICO. Insurers weigh factors differently, so it’s crucial to shop around to get cheap quotes if you have bad credit.

Car insurance company in IL Annual premiums for drivers with 'worst' credit
GEICO $1,374
Country Preferred $1,385
Country Mutual $1,396
SECURA $1,397
First Chicago Insurance $1,578
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Cheapest auto insurance for drivers with bad credit in Texas

In Texas, smaller provider Loya Insurance offers the cheapest car insurance rates for drivers with poor credit. In fact, Loya appears to not incorporate credit scores into annual premiums at all in this example. Allstate offers the second cheapest rates for drivers with bad credit in Texas. Monthly car insurance rates for drivers with bad credit in Texas range between $111 and $140.

Car insurance company in TX Annual premiums for drivers with 'worst' credit
Loya Insurance $1,325
Allstate $1,407
Southern County Mutual $1,872
GEICO $2,1517
Houston General Insurance $2,187
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Most expensive auto insurance for drivers with bad credit in New York

Insurers that offer very competitive rates for those with good credit can often be very expensive for drivers with bad credit. In New York, we found Progressive to have the greatest percent increase in insurance premium rates for drivers with bad credit — monthly premiums can be over $800 a month.

Car insurance company in NY Annual premiums for drivers with 'worst' credit Annual premiums for drivers with 'good' credit Percent increase in premiums compared to drivers with 'good' credit
Progressive $10,061 $1,792 461%
Esurance $6,218 $1,270 390%
Erie $5,599 $1,477 287%
Encompass $5,304 $1,434 270%
Nationwide $5,724 $1,588 260%
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Most expensive auto insurance for drivers with bad credit in Illinois

In Illinois, we found that smaller car insurance companies have the greatest hikes in premiums for drivers with very bad credit. Allmerica increases rates by 321% for drivers with bad credit.

Car insurance company in IL Annual premiums for drivers with 'worst' credit Annual premiums for drivers with 'good' credit Percent increase in premiums compared to drivers with 'good' credit
Allmerica Financial Alliance Insurance $13,932 $3,310 321%
Erie $3,265 $980 233%
MetLife $5,294 $1,746 203%
Rockford Mutual Insurance $2,691 $987 173%
GEICO $3,898 $1,545 152%
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Most expensive auto insurance for drivers with bad credit in Texas

In Texas, we found Metropolitan Lloyds to have the largest price increase for drivers with bad credit.

Car insurance company in TX Annual premiums for drivers with 'worst' credit Annual premiums for drivers with 'good' credit Percent increase in premiums compared to drivers with 'good' credit
Metropolitan Lloyds Company of TX $8,069 $2,260 257%
GEICO $4,759 $1,455 227%
USAA $4,446 $1,625 174%
State Farm $3,117 $1,326 135%
Chubb $3,229 $1,481 118%
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Auto insurance companies that do not check your credit score

Almost all insurers use your credit score to help determine your auto insurance premium, so the market for no-credit-check car insurance is quite limited. Here’s what you need to know about car insurance credit checks:

  • Even if you go directly to an auto insurance company, they will most likely do a credit check.
  • A car insurance company will run your credit at the time of creating your quote.
  • Even if you 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.
  • Reasonably, any 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 need to have higher premiums to absorb that heightened risk.

To figure out your best options, you need to first shop around for quotes for drivers with bad credit in the standard insurance market, which should only take a few minutes with QuoteWizard’s help. After that, consider non-credit-based insurers, such as usage-based car insurance companies. You’ll need to get a unique quote from a usage-based car insurance company because the rates are tailored to how you specifically drive.

Usage-based auto insurance companies don’t factor in credit scores as much as traditional insurers

If you have poor credit, it might be worthwhile to test out usage-based car insurance. In certain states, you might have access to car insurance companies that don’t use credit or weigh it less heavily in your premium, such as Root Insurance or Metromile. Usage-based insurers aren’t available in all states. Root Insurance, for example, is currently available in 29 states with a plan to reach all 50 states in the near future.

Usage-based car insurers have you drive around using their app to get a quote. The insurance company will track how much you drive with a diagnostic device you put in your car and other data to figure out how safe of a driver you are. After an initial period of tracking, the company will give you your quote, which you can then commit to. In some cases, the pricing of your auto insurance premium would be a base rate, let’s say $50 a month, and a rate per mile, or 3 cents per mile. In this example, if you drive 1,000 miles a month, your monthly premium would be $80.

What to do if it’s hard to find an auto insurance policy

You might be denied coverage by standard auto insurers if you’re a high-risk driver or have very poor credit. But if you’re refused car insurance entirely, even due to bad credit, you have options. First, shop around for quotes to see if any nonstandard or smaller insurance companies will take you on. If that doesn’t work, you can use your state’s high-risk auto insurance programs.

Tap into your state’s high-risk insurance resources

Your state can help you get a policy if the standard insurance market refuses to offer you a policy. Applying through a high-risk insurance pool will likely be much more expensive than the traditional insurance market, so it should be considered a last resort when finding an insurance policy. You can find your state’s plan for high-risk drivers through AIPSO, a resource that aggregates this information.

Improve your credit score to get cheaper car insurance premiums

Working to improve your credit is 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.

To improve your credit score:

  • Make payments on time for any debt you have — loans, credit cards or others.
  • 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 up too many credit card accounts frequently.
  • Check your credit score periodically to make sure it is correct.

If you have no credit, you’ll need to start building credit to save on your auto insurance premiums. Try to open up a line of credit. There are credit cards that are willing to accept applications of those who don’t have a 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

1We 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 minimum liability coverage required auto policy. e 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 worst credit.

Average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.

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