How do I get car insurance with bad credit?

Getting insurance with bad credit can be difficult and expensive. Bad credit leads companies to believe that it could have a negative impact on both your driving and ability to make payments. On average people with bad credit pay as much as 50% more for insurance.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 26, 2021

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Here's what you need to know...

  • Although illegal in a few states, the majority of states allow insurance companies to use your credit score as a factor in determining your premiums
  • Insurance companies believe your low credit score could have a negative impact on your driving and your ability to make payments
  • There are steps you can take to raise your credit

Can you get car insurance with bad credit? You can get car insurance with bad credit, but at a much higher cost than if your credit was good. On average, people with bad credit pay as much as 50% more for their car insurance than other drivers with a good credit report.

If you have bad credit, then you need to work on raising your credit score. If you don’t yet need car insurance and you know your credit is undesirable, then you can work toward boosting your score before applying for car insurance.

However, if you are in the position where you have to get car insurance now, the only thing you can really do is shop around for a better rate and reapply for insurance when your credit starts to get better.

Keep reading to learn all about:

  • credit scores and auto insurance rates
  • bad credit car insurance policies
  • boosting your credit score

Also, be sure to enter your zip above to find and compare bad credit auto insurance quotes right along with good credit auto insurance quotes so that you can find the cheapest car insurance.

Understanding Credit Reports


Credit reports can be lengthy and overwhelming, but you need to familiarize yourself with them for a variety of reasons. Your credit report is used for so many determining factors, from credit card approval to the rate you receive on your car insurance.

Not every state allows insurance companies to calculate your car insurance premium based on your credit score, but most of them do. It is in your best interest to understand your credit report and improve upon it as much as possible.

Your credit report has personal data on it that includes all of the addresses you have lived, all of the credit cards you have opened, any secured loans, and any credit reporting that was done by financial institutions and utility companies.

The information related to your credit reporting is used in conjunction with your current debt situation to determine your credit score.

The credit score is usually the figure that most people refer to when deciding your credit risk and whether to approve you for something or not. It is also the number that car insurance companies consider when deciding your car insurance rate.

A credit score ranges from 300 to 900, with the higher the score being better.

  • 800+ – An excellent score starts at 800, giving you perfect credit.
  • 720-799 – This earns you a status of great credit.
  • 680-719 – This gives you good credit.
  • 620-679 – An average credit score that isn’t bad, but could be improved.
  • 580-619 – This is a low credit score that needs improvement.
  • 500-579 – This is a very low score.
  • <500 – At this point, you need serious credit score rehabilitation. You will be facing high insurnace premiums when you have a credit score this poor.

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Why Bad Credit Impacts your Car Insurance

While it makes sense that a bad credit score could cause a creditor to deny you credit, it may not seem very sensible for it to impact your car insurance rate. However, it does and with that being said, you need to work on raising your credit score and reducing your car insurance rate.

Right or wrong, many businesses review your credit score as a risk factor for your personality. Employers do it all the time, especially jobs that involve cash handling such as a dealer at a casino or a cashier at a retail store.

Unfortunately, if you have a low credit score you are considered to be a high risk based on the sheer psychology that if your credit is low you must be in financial straits, and “desperate people do desperate things.”

Even if it doesn’t seem fair, at least with certain types of employment, there is some logic to it.

Now, with car insurance, it may be difficult to see the correlation between your credit score and your car insurance premium. However, studies show that people with lower credit scores are more likely to be less responsible and therefore are a higher risk for filing claims.

That is why some insurance companies factor in your credit score when determining your car insurance rate.

How to Raise your Credit Score to Get Better Car Insurance Rates


If you are looking to get car insurance down the road, there are certain steps you can take to raise your credit score. If you currently have car insurance and your credit score is not great, then you should also take the same steps to boost your credit score now.

Since car insurance usually gets renewed every six months to a year, you have a chance of lowering your car insurance rate at renewal time if your credit score goes up in the meantime.

Here are some steps to take:

  1. The first thing to do is to get a copy of your credit report and review it for accuracy. Report any errors to the credit reporting bureau immediately.
  2. Second, check for any signs of identity theft that could be negatively affecting your credit.
  3. Next, look over current credit card debts and devise a pay down plan. Try to make extra payments on at least one card every month, preferably choosing the one with the highest balance and the lowest credit limit. The faster you can pay down your balances and increase your limits, the quicker you can raise your credit score.

Having bad credit will not keep you from getting car insurance. It will, however, cost you more money in insurance premiums than if your credit score is good.

If you have bad credit, work toward raising your credit score and, in the meantime, find lower rates by shopping around.

What is the best insurance for bad credit? What auto insurance does not check credit?You can get free no-obligation quotes right now by simply following the car insurance rate tool prompt. No matter what your credit looks like just enter your zip to start!

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