A bad credit score isn't necessarily a dealbreaker when it comes to finding affordable insurance.
Finding cheap car insurance with bad credit can be difficult. On average, drivers with poor credit (scores between 300-579) pay $635 more for a six-month car insurance policy than drivers with very good credit (740-799). This comes out to a penalty of over $100 per month.
Reference the chart below to see the degree to which your credit score influences how much you pay for an auto insurance policy.
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 US.
Let's see which insurance provider has the cheapest rates and explore some other tips.
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 $1,254 per six-month policy period for auto insurance, across the surveyed insurers. That comes out to over $2,500 per year, or 77% higher than a driver with very good credit (between 740-799).
|Insurance Provider||6-Month Premium||Monthly Premium|
GEICO is the cheapest insurance company for car insurance with credit ranging from poor to fair. Bear in mind, GEICO is only the cheapest company for our specific user profile, which likely doesn't fit yours perfectly. The best way to find cheap auto insurance is to compare as many insurers as possible.
Car insurance companies use many data points to predict the risk presented by prospective customers. Using their own historical data and information from the Federal Trade Commission, companies have deduced drivers with poor credit ratings 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 insurance 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.
It depends on the state. California, Hawaii and Massachusetts are the only states that do not use credit scores as a rating factor. If you live in those states, your insurance won't be impacted by your credit score. Otherwise, every auto insurance company uses your credit report as a factor in determining your premium. Learn more about the factors that 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.
If you're dealing with high car insurance costs due to less-than-perfect credit, consider usage-based insurance. 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.
Below is a state-by-state breakdown of how much a poor credit report can impact your annual car insurance premium. On average, there is $1,520 — or slightly over 100% — in 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.
|State||Very Poor (300-579)||Difference||Exceptional (800-850)|
|Alabama||$2,947.46||139% or $1,714||$1,232.95|
|Alaska||$2,179.02||91% or $1,042||$1,136.16|
|Arizona||$3,035.50||142% or $1,782||$1,253.36|
|Arkansas||$2,950.56||98% or $1,460||$1,489.66|
|California||$1,868.03||0% or $0||$1,868.03|
|Colorado||$3,226.79||111% or $1,702||$1,524.57|
|Connecticut||$3,022.63||100% or $1,516||$1,506.03|
|Delaware||$3,362.84||116% or $1,807||$1,555.18|
|District of Columbia||$2,948.16||140% or $1,720||$1,228.14|
|Florida||$4,328.71||119% or $2,353||$1,975.10|
|Georgia||$2,680.11||84% or $1,230||$1,450.09|
|Hawaii||$1,045.19||0% or $0||$1,045.19|
|Idaho||$2,162.31||117% or $1,167||$994.65|
|Illinois||$2,379.19||109% or $1,245||$1,133.97|
|Indiana||$2,242.09||121% or $1,231||$1,010.15|
|Iowa||$1,948.75||100% or $977||$970.83|
|Kansas||$2,854.58||99% or $1,422||$1,431.91|
|Kentucky||$4,312.68||125% or $2,398||$1,914.53|
|Louisiana||$4,320.77||110% or $2,264||$2,056.08|
|Maine||$1,656.17||100% or $830||$825.71|
|Maryland||$2,499.02||97% or $1,236||$1,262.59|
|Massachusetts||$1,462.80||0% or $0||$1,462.80|
|Michigan||$8,640.46||271% or $6,314||$2,326.00|
|Minnesota||$2,485.08||118% or $1,347||$1,137.48|
|Mississippi||$2,820.11||103% or $1,433||$1,386.48|
|Missouri||$3,597.67||152% or $2,175||$1,422.65|
|Montana||$2,664.25||102% or $1,349||$1,315.02|
|Nebraska||$2,459.39||107% or $1,276||$1,183.13|
|Nevada||$3,289.06||94% or $1,599||$1,689.54|
|New Hampshire||$1,912.85||111% or $1,007||$905.66|
|New Jersey||$3,546.17||166% or $2,213||$1,332.93|
|New Mexico||$2,419.77||103% or $1,231||$1,188.65|
|New York||$3,769.57||149% or $2,259||$1,509.74|
|North Carolina||$1,448.66||60% or $543||$905.06|
|North Dakota||$2,474.77||111% or $1,302||$1,172.26|
|Ohio||$1,903.67||113% or $1,010||$893.41|
|Oklahoma||$3,131.14||96% or $1,538||$1,592.19|
|Oregon||$2,766.35||118% or $1,497||$1,268.66|
|Pennsylvania||$2,743.43||120% or $1,501||$1,242.39|
|Rhode Island||$3,798.85||105% or $1,949||$1,849.59|
|South Carolina||$2,659.03||113% or $1,411||$1,247.56|
|South Dakota||$3,336.60||125% or $1,853||$1,482.97|
|Tennessee||$3,238.42||143% or $1,908||$1,330.11|
|Texas||$2,771.30||123% or $1,529||$1,242.12|
|Utah||$2,666.71||141% or $1,562||$1,103.91|
|Vermont||$2,196.67||118% or $1,192||$1,004.59|
|Virginia||$1,828.83||108% or $949||$879.21|
|Washington||$2,612.71||125% or $1,453||$1,159.05|
|West Virginia||$2,856.02||117% or $1,545||$1,310.71|
|Wisconsin||$2,238.80||122% or $1,233||$1,005.07|
|Wyoming||$2,106.52||62% or $810||$1,296.35|
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.
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 who gets into an at-fault collision. The estimate for the repairs is $1,700. Last year, at-fault accidents raised car insurance rates by an average of $767 per year — and most insurance companies will charge higher rates for at least three years after a violation or claim hits your driving record. This $767 will amount to over $2,300 in total rate increases. If you include a typical $500 deductible, the average total cost of this claim would be over $2,800.
In this scenario, you would save yourself over $1,100 by paying out-of-pocket for the $1,700 in damage.
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 analysis.
Unlike a fine wine, your car depreciates rapidly. What this means in terms of savings is that the insurance coverage you once had on your 1999 Geo might not be necessary anymore. Here how to decide on coverage:
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.
If you're still looking for more ways to save or more information on rating factors and car insurance, check out our additional resources.