Car Insurance with No Credit History

The majority of car insurance companies use your credit score to help determine your monthly premium. If you don’t have an established line of credit — if you're young or new to the U.S., for instance — the process of acquiring car insurance can get complicated. While it may vary by insurance company, a lack of credit will probably look like "fair" credit in the estimation of an auto insurance company. Let’s explore options and best practices for shopping for car insurance without credit.

Not every car insurance company uses credit history as a rating factor, but most do. If you live in California , Hawaii, or Massachusetts, your credit score isn’t being utilized in your premium because state law prohibits it. Outside of these states, credit is a common pricing factor because of how accurately it predicts risk.

Determining and avoiding risk is auto insurance companies' primary goal. Historical data show drivers with bad credit not only file more claims than do drivers with high credit, but their claims tend to be more expensive. Thus, bad or incomplete credit leads to designation as a high-risk — read: expensive — car insurance client.

Refer to our full guide on cheap car insurance quotes with bad credit.

It’s tricky to determine how car insurance companies may view a lack of credit history. Credit history is typically pulled by a potential insurance company after the quoting process is complete. Credit score is then used to adjust the driver's rate up or down. Some companies may increase rates if a credit check turns up a lack of history, while other companies' rates may be unaffected.

The below rates should provide a general idea of how much car insurance costs without credit history. These rates come from our base methodology, with a "fair" credit score applied.

USAA is the cheapest car insurance company for drivers with limited or no credit history. To get the best possible price, get quotes from as many companies as you can.

Once you have established a line of credit, be sure to shop around again. There’s a price difference of nearly 50% between drivers with excellent credit and poor credit. If you’re able to establish an excellent line of credit, you can save on your monthly auto insurance payments.

If your credit history is limited because you’re a young driver, you have another costly rating factor to contend with. Car insurance companies believe your driving history is a good indicator of how you will drive. Without a driving history to reference, car insurance companies view new drivers as high-risk drivers. The aggregated data below show young drivers paying significantly more than older drivers.

Most auto insurance companies use credit score to determine their prices. Hawaii, California, and Massachusetts are the only states in which credit score cannot be utilized. In other US states, it's up to the car insurance company's discretion whether it uses credit as a rating factor. From the perspective of an insurance company, a credit score is a reliable way to price an insurance policy.

If you’re interested in car insurance companies that price policies based on how you drive, rather than who you are, consider usage-based insurance programs. These insurance policies rely on in-vehicle technology to track your driving behavior and determine your premium. Some of these companies do utilize credit scores, but to a lesser extent than do traditional policies.

Additional resources