Best Car Insurance Companies for Bad Credit
Credit history is a common factor in determining auto insurance rates. However, there are ways to find the best affordable car insurance companies for bad credit. Improving your credit score and bundling discounts can lower your rates from car insurance companies. Learning more about the best car insurance companies for bad credit will help you find the most affordable rates.
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UPDATED: Aug 31, 2021
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- Car insurance companies use credit history to determine rates
- USAA has the lowest rates for customers with bad credit
- Improving your credit score will lower your auto insurance rates
Understanding your car insurance policy will help you find affordable auto insurance with bad credit.
Improving your credit score and bundling discounts are the best way to save money when your credit score is low. Learning more about the best auto insurance companies for bad credit will help you find cost-effective coverage.
Before discovering the best car insurance companies for bad credit, enter your ZIP code to find free auto insurance rates in your area.
What rates are provided by the best car insurance companies for bad credit?
Comparing auto insurance rates by credit level will help you find the best affordable car insurance companies for bad credit. The following chart shows the impact of your credit score based on the company and credit level:
|Company||Poor Credit||Fair Credit||Good Credit|
The chart shows that the best car insurance company rates for bad credit are significantly higher than good credit.
While USAA has the lowest rates for customers with poor credit, it is only available to active military, veterans, and their immediate family members. GEICO and Nationwide offer the next cheapest car insurance rates for drivers with bad credit.
MetLife has the highest rates for customers with poor credit, and Michigan is the most expensive state for drivers with bad credit as rates average at $720 per month (or $8,640.46/yr).
Car insurance companies use credit history as a determining factor for rates in all but four states. California, Hawaii, Massachusetts, and Washington don’t allow this factor to be considered by auto insurance companies, and drivers with bad credit in those states may be eligible for cheaper rates.
Why do car insurance companies use credit history to determine rates?
According to the Insurance Information Institute, car insurance companies use several factors to determine auto insurance rates.
The goal is to determine the risk of insuring drivers. Car insurance companies use information gathered internally and from the Federal Trade Commission to determine risk.
Auto insurance companies have determined that drivers with poor credit are more likely to file claims than those with good credit scores. Customers with poor credit are also more likely to require higher payouts than other credit pools.
With this information, the best car insurance company quotes for bad credit are higher because the company is more likely to provide a payout before customers pay the entirety of the policy.
Many companies treat car insurance with no credit the same as bad credit. A driver with no credit has no history for an auto insurance company to use to determine rates, so they’re considered riskier.
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How can you lower your car insurance rates with bad credit?
Can you get car insurance if you have bad credit? While it might be hard to find affordable coverage, it is possible. The following are some of the ways that you can decrease your auto insurance rates with poor credit:
Reduce Your Coverage
Car insurance is a-la-carte, meaning that it is priced individually. Reducing your coverage to the state’s minimum requirement will lower your rates until you improve your credit score. You can also raise your deductible to decrease your rates.
Change Your Car Insurance Company
In some cases, switching car insurance companies can result in lower rates. Auto insurance companies use different factors when determining rates, and credit scores might not be as influential with the new company.
Drive a Less Expensive Car
Car insurance companies consider the car on your policy when determining rates. High-performance vehicles are more expensive to insure because companies assume drivers will drive faster. A more affordable vehicle can result in lower rates.
What deals are available from the best car insurance companies for bad credit?
Car insurance companies provide various discounts to customers, allowing them to lower their rates. Discounts won’t completely negate the increase in rates, but the deals can help make auto insurance more affordable.
The best discount for car insurance with bad credit is the safe driver discount.
Customers that avoid accidents or traffic violations over a specified period will receive a deal on rates by driving safely. You can also receive discounted insurance by adding safety mechanisms to your vehicle.
Most car insurance companies also offer a discount for paying off your bill in advance. This one-time payment decreases the risk of insuring a driver with poor credit because the company doesn’t have to worry about missed payments.
Another option to reduce rates is a multi-car insurance discount. Most companies offer a deal for including multiple vehicles on the same policy. This is a good option if you have a family or multiple cars.
While you can bundle discounts to reduce your car insurance rates, the best way to lower your rates is by improving your credit score. Some of the ways that you can improve your credit score include:
- Making payments on time
- Making at least the minimum payment
- Using credit monthly and paying it down monthly
Improvements in your credit score might not be noticeable for a few months, but these tips will make an impact.
How to Find the Best Car Insurance Companies for Bad Credit
Credit scores usually influence car insurance rates. While bad credit will increase your rates, auto insurance companies provide various discounts to lower your payments. Learning about the best car insurance companies for bad credit will help you find affordable coverage.
Now that you know about the best car insurance companies for bad credit, enter your ZIP code to get free auto insurance quotes in your area.