Best Car Insurance Quotes for Bad Credit

Credit scores typically range from 500 to 800. Insurers typically consider scores of 669 or lower to be “below average” and a score of 580 or lower as “poor.”1

Most car insurance companies consider your consumer credit information when setting auto insurance rates. Actuarial data shows drivers with poor credit tend to file more claims than drivers with good or excellent credit, so insurers typically charge higher rates to drivers with poor credit.

For example, the overall average cost of car insurance for drivers with poor credit is $175 per month, according to Insurify data. Meanwhile, the monthly average for drivers with excellent credit is $126. Comparing car insurance rates can help drivers with below-average credit find the best deal available to them.

Best car insurance for drivers with bad credit

Even if you have bad credit, you have options when it comes to car insurance. Here are some of the best car insurance companies for drivers with lower credit scores.

COUNTRY Financial: Best for bundling and discounts

Mile Auto: Best for low-mileage drivers

GEICO: Best for broad availability

Auto-Owners: Best for customer satisfaction

Cheapest car insurance for drivers with bad credit

Finding affordable car insurance when you have bad credit can feel challenging, but shopping around for quotes from multiple insurers can help you find cheap coverage.

Here are the cheapest companies for people with a low credit score.

Why does your credit score affect car insurance rates?

Car insurance companies make pricing decisions based on the level of risk you pose, including your likelihood of having an accident and filing a claim. Studies have shown that people with bad credit tend to file claims more frequently than drivers with good credit.

The two are correlated, although having bad credit doesn’t directly cause people to file more claims. Insurers may use credit history to generate a credit-based insurance score, which they then consider when deciding whether to approve or deny you for a policy. And if you’re approved, companies may also consider your credit score when setting your rates.

Due to concerns over the accuracy and fairness of the practice, four states ban or limit auto insurers from considering your credit score when you apply for car insurance:3

• California

• Hawaii

• Massachusetts

• Michigan

How credit-based insurance scores work

Car insurance companies don’t look at your consumer credit scores when setting rates. Instead, they use the information in your credit file to generate a credit-based insurance score. Each company has its own proprietary formula for generating an insurance score, so you can have more than one credit-based insurance score.

But all insurance companies use credit-based insurance scores to help predict how likely a driver is to file a claim and how much those claims might cost the insurer.

While you can easily get a free copy of your credit reports and see your credit scores, you might have a harder time seeing your credit-based insurance scores. You may be able to ask your current insurer or an insurance agent for yours.

Car insurance rates for bad credit by state

Here’s a look at how much you might pay on average each month for car insurance by state if you have bad credit, according to Insurify data.

Alternative options for drivers with bad credit

If you’re having a hard time finding standard coverage at a price you can afford because of your credit score, you can look into a few alternatives. Drivers with bad credit scores may benefit from insurers that don’t require credit checks, telematics driving programs, or non-standard car insurance coverage.

No-credit-check auto insurance

Insurers that don’t look at your credit are relatively rare. An estimated 95% of all car insurance companies use your credit information in states where it’s legal. Depending on where you live, you may not find insurers that don’t check your credit.

If you can find a no-credit-check insurance company, you should earn rates more in line with people who have better credit scores. Make sure to research the company to decide whether it’s good to work with.

Telematics

If you enroll in a telematics program, your insurer will receive information about your driving habits, including how often you drive, whether you safely accelerate and decelerate, and what time of day you typically drive. You usually need to plug a telematics device into your car or download your insurer’s mobile app to your phone and allow it to record your driving habits.4

If you’re a good driver, you can earn significant savings on your car insurance costs. Some companies offer discounts of 30% off or more. On the flip side, you may end up paying more if you don’t practice safe driving habits.

Non-standard car insurance

Some companies specialize in working with high-risk drivers, including people with bad credit or poor driving records. You can look to these insurers if one or more traditional insurance companies have denied issuing you a policy. Insurance from non-standard insurers that provide coverage to high-risk drivers typically costs more.

How to boost your credit score

Good credit can have many advantages, including allowing you to qualify for lower car insurance rates. It’s impossible to go from bad credit to good credit overnight, but you can take steps to improve your standing over time, such as:

• Pay your bills on time. Credit card companies, utilities, and other companies typically report consumer payment history to the credit bureaus. Always paying your bills on time is the most important thing you can do to build your credit.

• Pay down credit card balances. Your credit utilization ratio — the percentage of credit you’re using compared to your total available credit — is a significant factor in credit scoring. Keeping credit card balances low — or better yet, paid in full — will improve your credit utilization and ultimately your credit score.

• Avoid applying for too much credit. It’s a good idea to only apply for credit when you actually need it. To grant you a new credit account, creditors look at your full credit report. This is called a “hard inquiry.” Too many hard inquiries can lower your credit score.

• Clean up credit report errors. Credit reports can have mistakes on them that negatively affect your credit score. Get free copies of your reports from the three major credit bureaus (Experian, Equifax, and TransUnion) and check for errors. If you spot any, contact the credit bureau in writing to have it corrected.

How to save on car insurance

You may pay more for coverage if you have bad credit, but you can still find ways to lower the cost of car insurance. Consider the following tips to earn cheaper coverage:5