How to get car insurance if you don’t have good credit

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According to our cost research, if you have poor credit, you could be paying as much as 137% more for car insurance depending on your state. But there are ways to save..

In this guide, we’ll cover how your credit affects your rate and how to shop for more affordable coverage from car insurance providers.

In this article:

  • Can you get car insurance if you don’t have good credit?
  • Average rates, by company, for drives with poor credit
  • How to find cheap rates for car insurance
  • Why insurance companies check credit
  • Which companies don’t check credit?
  • What to do if you’ve been turned down for poor credit
  • How credit affects insurance costs by state
  • Our methodology
Can you get car insurance if you don’t have good credit?

Almost every state requires drivers to carry liability car insurance, and there are plenty of options for car insurance if you don’t have good credit. That said, the options might be expensive. Depending on your state, having a low credit score can increase your rate by as much as 137%.

According to our rate estimates, a 34-year-old driver with good credit can find car insurance for about $1,732 per year on average. A fair credit score increases that to $2,100, and a poor score increases it further to $3,123 annually. That’s nearly double the cost for poor credit drivers.

Of course, credit score is just one factor insurance companies consider, along with things like your driving history and age. Here’s how having a low credit score can influence rates for 24- and 35-year-old drivers differently.

24-year-old* 35-year-old*
Good Credit $2,363 $1,732
Fair Credit $2,862 $2,100
Poor Credit $4,281 $3,123
Average rates, by company, for drivers with poor credit

Some providers may be less expansive than others if you don’t have good credit. While you will probably pay more than you would if you had excellent credit, you don’t have to pay astronomically higher rates. According to our rate estimates, the cheapest companies for car insurance for those with lower credit scores include USAA, Geico, Nationwide and Progressive. 

Car Insurance Company Average Cost For Poor Credit Drivers*
USAA $1,807
Geico $2,077
Nationwide $2,220
Progressive $2,514
Erie Insurance $2,602
American Family Insurance $2,642
Travelers $2,949
How to find cheap rates for car insurance

The No. 1 thing you can do to find cheaper rates is to shop around as much as possible. Ideally, take a couple of weeks before you need to renew your coverage and compare free quotes from three or more car insurance companies. You can also shop around each time your policy is up for renewal, even if you don’t plan on switching at that time.

Here are a few more ways that might help you save (but do your homework before you opt in):

  • Usage-based insurance: Usage-based telematics programs track your driving habits and reward you for safe driving. You could bring down your car insurance rates if you are a cautious driver.
  • Pay-per-mile insurance: Other telematics car insurance programs base pricing on your total mileage driven. If you work from home or drive infrequently, you could save money.
  • Search for the right discounts: Discounts and discount amounts vary significantly between companies. Shop around to find the best discounts for your situation, which could include multi-vehicle, student, military or good driver discounts.
Why insurance companies check credit

Let’s make a quick distinction. The credit score you’re familiar with, which you can check through any of the three major credit bureaus, is not exactly what car insurance companies look at. Car insurance companies use a credit-based insurance score to calculate risk.

The credit scoring company FICO developed the credit-based insurance scoring model in the 1990s, and then it and other organizations subjected the score to years of testing. According to FICO, credit-based insurance models “are based on the study of millions of policies and billions of dollars in claims payments from national and regional insurance companies representing all major geographic areas and distribution systems.”

According to the Insurance Information Institute (III), multiple studies have confirmed a high correlation between the credit-based insurance rating and the ratio of claims to premiums for a person.

In other words, the studies found that people with low credit scores cost insurance companies more in claims compared to people with higher scores. According to the III, today, 95% of both home and auto insurance companies use the model to predict risk.

Credit score vs. credit-based insurance score

So what’s the difference between credit scores and credit-based insurance scores? 

Both models pull information from your credit report, but they weigh aspects slightly differently. Here’s how FICO’s credit-based insurance score and credit score compare, according to the National Association of Insurance Commissioners and FICO.

FICO Credit-Based Insurance Score Weight FICO Credit Score Weight
Payment History 40% 35%
Outstanding Debt 30% 30%
Credit History Length 15% 15%
New Credit 10% 10%
Credit Mix 5% 10%

You can see that FICO’s credit-based insurance score puts more weight on payment history and less on credit mix. Besides this, both scores also have different ranges. FICO’s standard credit scores range from 300 to 850, while its credit-based insurance score ranges from 100 to 900, according to Experian. 

Credit-based insurance scores are not available to the public. However, both scores are similar in how they operate. Basically, if you have a low credit score, you also have a low credit-based insurance score. 

Which companies don’t check credit?

Whether an insurer checks credit scores will depend on the state in which you live rather than the company itself. 

Every state except California, Hawaii and Massachusetts allows companies to use credit-based insurance scores as a rate factor. If you live in one of those three states, the car insurance company is not allowed to use your credit data to set your rate. 

However, if you aren’t among the lucky few, there’s no way to know for sure how much your credit score affects what you pay for car insurance. This is because companies don’t disclose the exact factors they used to calculate rates or how much they weigh each of those factors. This is why it’s important to compare car insurance quotes from multiple providers when you shop. 

And don’t worry, checking multiple quotes won’t affect your credit score. Car insurance companies use soft inquiries when checking the credit scores of potential policyholders.

What to do if you’ve been turned down for poor credit

In some situations, you might find that car insurance companies are declining to cover you or charging you unreasonably high prices because of your poor credit. If this happens multiple times, you have the right to get car insurance through your state’s assigned risk pool. 

States require car insurance companies to take on a portion of high-risk drivers, including people with very bad credit. Each state does this differently, but you can usually work through an agent at a company that has just turned you down to access the assigned risk pool. 

Simply speak to an agent at an insurance company and tell them that you need coverage through the assigned risk pool. The agent will be able to either sell you their own high-risk insurance or connect you to another company that can provide you coverage.

How credit affects insurance costs by state

According to our estimates, drivers pay 46% to 137% more for having poor credit, depending on the state. Each state determines how its car insurance companies can set rates, including how they use a credit-based insurance score. This means having bad credit costs drivers more in some states than others.

For example, having bad credit in Georgia may raise your rates by about 63%, but having bad credit in Wisconsin can increase your rates by as much as 122%. The table below shows average rate estimates by state for a 35-year-old driver with both good and poor credit, as well as the premium increase between the two averages.*

State Annual Cost of Car Insurance for Good Credit Annual Cost of Car Insurance for Bad Credit Premium Increase
Alabama $1,478 $2,720 84%
Alaska $1,315 $2,092 59%
Arizona $1,658 $3,733 125%
Arkansas $1,462 $2,694 84%
California $2,519 $2,519 0%
Colorado $1,688 $2,862 70%
Connecticut $1,900 $4,056 114%
Delaware $1,943 $3,255 68%
Florida $2,927 $5,339 82%
Georgia $1,587 $2,581 63%
Hawaii $1,255 $1,255 0%
Idaho $1,113 $2,058 85%
Illinois $1,494 $2,594 74%
Indiana $1,106 $1,995 80%
Iowa $1,121 $1,975 76%
Kansas $1,398 $2,347 68%
Kentucky $1,843 $3,634 97%
Louisiana $3,867 $6,955 80%
Maine $1,013 $2,227 120%
Maryland $1,970 $3,179 61%
Massachusetts $2,632 $2,632 0%
Michigan $4,430 $9,936 124%
Minnesota $1,515 $3,107 105%
Mississippi $1,379 $2,652 92%
Missouri $1,763 $3,191 81%
Montana $2,243 $3,557 59%
Nebraska $1,394 $2,728 96%
Nevada $2,354 $3,665 56%
New Hampshire $1,190 $2,635 121%
New Jersey $2,132 $4,232 99%
New Mexico $1,385 $2,346 69%
New York $4,048 $9,595 137%
North Carolina $1,278 $1,863 46%
North Dakota $1,341 $2,469 84%
Ohio $939 $1,614 72%
Oklahoma $1,652 $2,718 65%
Oregon $1,302 $2,243 72%
Pennsylvania $1,447 $2,465 70%
Rhode Island $1,947 $3,578 84%
South Carolina $1,610 $2,813 75%
South Dakota $1,348 $2,733 103%
Tennessee $1,237 $2,496 102%
Texas $2,094 $3,422 63%
Utah $1,463 $2,883 97%
Vermont $1,029 $1,919 86%
Virginia $1,109 $1,833 65%
Washington $1,286 $2,086 62%
Washington D.C. $1,812 $3,238 79%
West Virginia $1,418 $2,610 84%
Wisconsin $970 $2,150 122%
Wyoming $1,542 $2,669 73%

Anytime you shop for car insurance, we recommend comparing multiple free quotes to find the best rates.

* Auto insurance rate estimates were generated by Quadrant Information Services.

*Data accurate at time of publication.

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