Best cheap car insurance for drivers with bad credit

Finding cheap car insurance with bad credit can be difficult. On average, drivers with poor credit (scores between 300-579) pay $596 more for a six-month car insurance policy than drivers with very good credit (740-799). This comes out to a penalty of $99 per month. In order to help you find the best car insurance rates with bad credit, we created a user profile and fetched car insurance quotes from major insurance companies in the U.S.

Let's see which insurance provider has the cheapest rates and explore some other tips.

  1. Cheapest car insurance with bad credit
  2. Why do insurance companies use credit scores?
  3. Which companies don’t use your credit score?
  4. How to save with bad credit
  5. Additional resources

 

What are some cheap car insurance companies for bad credit?

Using a profile outlined here, we surveyed eight insurance providers to see which company offered the cheapest rates for drivers with generalized credit scores. Those with very poor credit (between 300-579) pay an average of $1,516 per policy period for auto insurance, across the surveyed insurers.

Insurance Provider6-month premium
Allstate$1,383
Farmers$1,456
GEICO$1,556
Liberty Mutual$1,823
Nationwide$1,503
Progressive$1,706
State Farm$1,585
USAA$1,423

Allstate is the cheapest insurance company for car insurance with credit ranging from poor to fair. Bear in mind Allstate is only the cheapest company for our user profile. Your best bet for finding affordable insurance is to compare as many insurers as possible.

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Why do car insurance companies use credit history?

Car insurance companies try to use as much data as possible in order to predict the risk presented by prospective customers. Using their own historical data and information from the Federal Trade Commission, they have deduced that drivers with poor credit tend to file more claims than do drivers with excellent credit.

Data show that when drivers with worse credit do file a claim, the payout by the insurance company tends to be higher than payouts to other credit pools. All in all, this makes drivers with better credit scores cheaper to insure — thus, their premiums are lower.

Keep in mind, your car insurance companies use soft credit inquiries when you buy your policy. Soft inquiries should not lower your credit score. If you’re just comparing or shopping around for car insurance, your credit will not be impacted via a hard or soft inquiry. However, it’s important to give the most accurate information when shopping for car insurance. Once you get to the final stage of your quote process, your premium will update to better reflect your credit and driving history.

 

Which car insurance companies don’t use credit score as a rating factor?

It depends on the state. California, Hawaii, and Massachusetts are the only states that do not use credit score as a rating factor. If you live in those states, your insurance won't be impacted by your credit score. Otherwise, every insurance company uses your credit report as a factor in determining your premium. Learn more about what factors go into calculating your premium.

One exception to this is Root Car Insurance. Root is a telematic-based insurance company that uses the way you drive in order to price your premium. For more information, see here.

If you're dealing with high car insurance costs due to less-than-perfect credit, consider a usage-based insurance policy. Telematics- and usage-based auto insurance use the way you drive to determine your premium. Although your credit score is still a factor in some of the programs, if you're a safe driver, this might be a good option for you.

 

Auto insurance rates for drivers with bad credit by state

Below is a state-by-state breakdown of how much a poor credit report can impact your annual premium. On average, there is $1,520 or slightly over 100% of premium difference between drivers with very poor credit and drivers with exceptional credit — so if you have bad credit, you can expect to pay double the premium a driver with great credit would. Click on your state to learn more.

 

StateVery Poor (300-579)DifferenceExceptional (800-850)
Alabama$3,134.61101% or $1,580$1,554.04
Alaska$2,437.2666% or $970$1,467.24
Arizona$3,338.89127% or $1,871$1,467.08
Arkansas$3,460.6788% or $1,621$1,839.42
California$1,660.120% or $0$1,660.12
Colorado$3,263.0894% or $1,581$1,681.34
Connecticut$3,200.75109% or $1,672$1,527.84
Delaware$3,436.3697% or $1,700$1,735.96
District of Columbia$4,162.00136% or $2,398$1,763.22
Florida$4,109.7987% or $1,922$2,187.47
Georgia$3,744.72131% or $2,125$1,619.71
Hawaii$1,531.290% or $0$1,531.29
Idaho$2,361.69114% or $1,262$1,099.13
Illinois$3,280.50160% or $2,021$1,259.27
Indiana$2,138.1790% or $1,014$1,124.10
Iowa$2,354.85106% or $1,213$1,141.08
Kansas$2,527.4366% or $1,007$1,519.76
Kentucky$4,022.0674% or $1,718$2,303.91
Louisiana$4,588.5290% or $2,173$2,415.12
Maine$1,816.21100% or $909$907.01
Maryland$3,949.14133% or $2,257$1,691.24
Massachusetts$1,197.140% or $0$1,197.14
Michigan$5,866.10133% or $3,353$2,512.44
Minnesota$3,662.18172% or $2,319$1,342.59
Mississippi$3,095.38110% or $1,623$1,471.70
Missouri$2,637.7590% or $1,251$1,386.25
Montana$2,134.7549% or $708$1,426.72
Nebraska$2,816.00123% or $1,553$1,262.38
Nevada$3,655.82109% or $1,914$1,741.82
New Hampshire$2,120.4993% or $1,026$1,094.36
New Jersey$4,147.84157% or $2,534$1,612.97
New Mexico$2,286.8168% or $926$1,360.03
New York$4,891.51127% or $2,744$2,146.99
North Carolina$1,771.7067% or $715$1,056.43
North Dakota$3,674.88118% or $1,989$1,685.34
Ohio$1,786.4887% or $835$950.58
Oklahoma$3,311.1299% or $1,650$1,660.84
Oregon$2,720.5489% or $1,281$1,438.55
Pennsylvania$3,232.49119% or $1,757$1,474.63
Rhode Island$4,434.17101% or $2,232$2,202.11
South Carolina$3,888.34180% or $2,501$1,386.79
South Dakota$2,839.11151% or $1,708$1,130.69
Tennessee$2,680.4097% or $1,319$1,360.41
Texas$3,321.0371% or $1,382$1,938.80
Utah$3,461.95164% or $2,155$1,306.53
Vermont$2,670.74156% or $1,627$1,043.28
Virginia$1,931.7369% or $794$1,137.61
Washington$1,968.3135% or $516$1,451.73
West Virginia$2,593.9759% or $961$1,632.00
Wisconsin$2,133.66109% or $1,116$1,016.72
Wyoming$3,267.36162% or $2,023$1,244.00

 

 

How to save with bad credit

Because your credit score is a pivotal non-driving rating factor, it would be difficult to negate its effects with a few discounts. But by doing your homework and trying to get as many discounts as possible, you could rack up some savings. Let's explore some ways to save money on car insurance with a poor credit score. See more popular car insurance discounts.

Look for the following discounts

Be smart with your claims

Being smart with your claims means don’t file a claim unless the damages to your vehicle are greater the rate increase you will receive. Let’s look at an example.

You’re a driver in Texas and get into an at-fault accident. The estimate for the repairs is $1700. Last year, at-fault accident raised car insurance rates an average of $617 per year — most insurance companies will raise your rates for at least 3 years after a violation or claim. This $617 will amount to over $1,850 in total rate increases. If you include a typical $500 deductible, the average total cost of this claim would be $2,817. 

In this scenario, you would save yourself over $1,100 by paying for the $1700 claim yourself. 

So, when thinking if it’s worth it to file a claim, you should consider the estimated cost of repairs is versus what you would end up paying after your rate is increased. To find out what you would be paying for your state, see our State of Insurance data here.

For more information on when to file or not file an insurance claim, see here.

 

Find the right coverage for your car

Unlike fine wine, your car depreciates pretty rapidly. What this means in terms of insurance savings is that the coverage you once had on your 1999 Geo might not be necessary anymore. Here how to tell:


Do you have a loan on your vehicle?

Vehicles that have a lien or loan are usually required to maintain physical coverage as the lienholder has vested insurance in the vehicle.


What’s the value of your vehicle?

You can determine this through Kelley Blue Book or NADA. If your vehicle is worth less than $4,000, you should drop your collision coverage and potentially your comprehensive. These coverages are optional if you own your vehicle and are designed to protect its physical integrity. If it’s not worth much to begin with, you could be paying for coverage you do not need.

If you decide to drop both of these coverages, consider adding uninsured and underinsured motorist coverage. If you need to keep these coverage options, considering raising your deductible. Because they are inversely related, a higher deductible will equal a lower premium.

 

Look for the right company

Follow our lead and shop with as many companies as possible in order to find the cheapest rate for you. Don’t be afraid to look at non-standard companies (i.e., the ones you haven’t heard of) as they may be more inclined to offer you a better rate than some of the bigger names.

 

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Additional resources

If you're still looking for more ways to save or more information on rating factors and car insurance, check out our additional resources.

Additional Resources:

Cheap Car Insurance for Bad Credit

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