How to Get Car Insurance With No Credit History
Drivers with no credit history tend to pay more for insurance. But using telematics programs, usage-based insurance, and comparison shopping can save you money.
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If you don’t have a credit history, it can be difficult to find affordable premiums. States can use your credit history to determine your rates, except for California, Hawaii, Massachusetts, Michigan, and Washington.
Insurers believe that credit history indicates how likely you are to file a claim. Drivers with excellent credit are less likely to file claims than drivers with poor credit.
Here’s what you should know about how credit can affect insurance rates and how comparing quotes can help you find cheap coverage.
Cheapest car insurance for drivers without credit history
It’s not just poor credit that can affect your car insurance rate. Having no credit history can also increase your premium. Based on Insurify’s rate data, COUNTRY Financial is the cheapest insurer for drivers with no credit history, with an average premium of $41 per month for liability-only car insurance. Auto-Owners and USAA also offer some of the lowest rates for drivers with no credit, according to recent premium data.
The table below outlines the average monthly quotes from some insurance companies that offer policies to drivers with no credit history:
How to get no-credit-check auto insurance
It’s possible to get approved for car insurance with no credit check. For example, if you live in a state with laws that don’t allow insurers to run a credit report, you can avoid a credit check. Even if you have a poor credit score, it shouldn’t affect your rate if you live in one of these states.
While you’re shopping, it’s important to consider how credit history affects rates and what other insurance products don’t use credit history.
Usage-based insurance
While most car insurance policies require a credit check, certain types of insurance don’t, including usage-based insurance.
With a usage-based car insurance policy, your premium is based on the number of miles you drive each month. You pay a small monthly fee plus an additional rate for every mile you drive. It can be a good option if you drive infrequently, but this type of policy could be more expensive if you drive a normal amount (around 10,000 miles or more per year).
Nationwide SmartMiles, Allstate DriveWise, Hugo, and Metromile are popular usage-based insurance programs and companies.
Telematics
Telematics programs are another coverage type that typically doesn’t require a credit check.
A telematics car insurance policy uses a device in your vehicle to track your mileage and driving habits, like acceleration, brake force, and when you drive (at night versus during the day). If you practice safe driving habits consistently, insurers may reward you with a lower rate.
Many major insurance companies offer telematics insurance programs, including Progressive Snapshot, State Farm Drive Safe & Save, USAA SafePilot, and GEICO DriveEasy.
How your credit score affects car insurance rates
Credit scores affect car insurance rates because they indicate how likely a driver may be to file insurance claims.
“There is a strong correlation between drivers with bad credit and higher-than-usual insurance claims,” says Nick Schrader, an insurance agent with Texas General Insurance. “Drivers with poor credit may also be more likely to miss payments or have their insurance lapse.”
When drivers fail to pay their insurance premiums or file an insurance claim, their insurance company loses money. To offset these potential risks, most car insurance companies charge higher rates for drivers with poor credit and lower rates for drivers with good credit.[3]
To help you understand how much you might pay for car insurance based on your credit score, here are the average liability-only car insurance premiums for drivers with excellent, good, average, and poor credit:
Cheap auto insurance for drivers with bad credit
Based on Insurify’s analysis of recent rate data, the cheapest auto insurance companies for drivers with bad credit scores are COUNTRY Financial, Auto-Owners, and USAA. These companies may require a credit check, but if you have poor credit or no credit, you can still get an affordable rate.
In the table below, you can see the cheapest insurers for drivers with a low credit score and the average monthly premium for full and liability-only coverage:
Additional insurance cost-rating factors to consider
Your credit history isn’t the only factor that can affect your car insurance premium. Here are some other criteria that insurance companies consider when calculating your rate:
Which states don’t allow credit score checks?
Not every state allows insurance companies to use a credit-based insurance score. The following states currently prohibit insurance companies from using credit as a rating factor:[1]
These states prohibit the use of credit checks for a few reasons. First, many people are unaware that insurance companies check credit scores when they apply for car insurance. Additionally, many people don’t understand how or why their credit score affects their premium.
Advocacy groups have also argued that using a credit-based insurance score targets low-income individuals and minorities and isn’t necessarily an indicator of someone’s likelihood to experience insurance losses.
How to get car insurance with bad credit
It can be difficult to find affordable car insurance with bad credit. Here are some tips on how to secure the cheapest rates.
Comparison shop. Using a comparison tool allows you to see multiple quotes from different insurers all at once and helps you secure the best rate.
Look for discounts. Take advantage of discounts, such as bundling, safe driving, multi-car, or anti-theft device discounts.
Increase your deductible. Increasing your deductible can save you money on your monthly premiums. But be aware that you’ll have to pay more out of pocket before your insurance kicks in after an accident.
Tips for raising your credit score
If you have poor credit, raising your score can help you get a lower car insurance rate. Here are a few tips for improving your credit score:
Make on-time payments. Paying your bills on time is important, especially if you want to improve your credit score. If you have trouble remembering due dates, consider enrolling your accounts in automatic payments so you never risk missing a payment.
Pay down your balances. If you have debt, whether it’s loan debt or credit card debt, work on paying down your balances. Also, keep an eye on your credit utilization (how much of your available credit you’re using compared to your total available credit). The lower your credit utilization is, the better your credit score will be.
Limit new accounts. Avoid opening new credit cards or taking out new loans frequently. This can cause your credit score to drop. Only open new accounts when you really need them, and make sure you can afford the monthly payments beforehand.
No-credit-check car insurance FAQs
Here are answers to some commonly asked questions about getting car insurance with no credit check.
Can you get car insurance without a credit check?
Yes, you can get car insurance with no credit check. But you may be limited to certain types of car insurance, like usage-based auto insurance and telematics auto insurance.
Why do insurance companies check your credit score?
Car insurance companies look at your credit history, not your credit score. They use your credit history to generate a credit-based insurance score that indicates how likely you are to have insurance losses. In general, drivers with excellent credit pay the lowest rates, whereas drivers with bad credit or no credit pay the highest rates.
How can you get cheap car insurance with a bad credit score?
One of the best ways to get cheap car insurance with bad credit is to use an online quote-comparison platform. With a single application, you can see which insurers can offer you the lowest rates based on your credit score and the type and amount of coverage you want.
Can you get car insurance without a credit history?
Yes, you can get car insurance without a credit history, but you’ll probably pay a higher premium. If you have no credit, consider applying for usage-based or telematics car insurance policies, which may not require a credit check.
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