What car insurance companies don’t use credit scores?

Car insurance companies that don't use credit scores include The General and GEICO. Start comparing car insurance companies that don't use credit scores with our online quote tool to find the lowest rates.

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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...

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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...

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UPDATED: Jul 14, 2020

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Here's what you need to know...

  • Credit ratings are important to insurance companies when determining policies, though they technically do not use your credit score, but rather a credit-based “insurance score”
  • Sometimes credit ratings can force car insurance rates to skyrocket but this differs from state to state
  • Car insurance companies that don’t run your credit can be hard to find and expensive to use
  • You can get your credit report from the three major credit reporting bureaus: Equifax, Experian, and TransUnion
  • If you find any errors on your report, you will need to dispute them so they can be corrected

What insurance companies don’t use credit scores? Why do credit scores affect car insurance rates? How can you find car insurance for bad credit?

A solid credit rating also shows that you are less likely to take dangerous chances in your car and therefore be a lower risk to an insurance company.

But what are the options for those who do not have such a sterling credit rating? If you know car insurance companies that don’t run your credit, this can be a good place to start.

Read on to learn about credit ratings and car insurance, and then be sure to enter your ZIP to compare free car insurance quotes from top companies online and find car insurance quotes with no credit check!

Credit Score Affects Insurance Rates

Are there car insurance companies that don’t check credit when calculating car insurance rates and issuing car insurance policies? Car insurance companies are all about risk.

They assume the risk that you may be responsible for a car accident while driving or incur some other type of loss involving your vehicle, in exchange for a rate that you pay monthly or yearly.

Rates are set according to statistics that help determine what type of risk a driver presents. A variety of factors is considered when setting insurance rates. These factors include age, gender, experience, claim history, driving record, where you live, the type of car you drive, and more.

This video gives you more information on how credit scores affect your car insurance rates.

Your credit history is one of the newest variables that insurers now consider when setting car insurance rates. How you have handled your credit in the past is a significant factor in how much you will pay for car insurance.

A visit to the website of the insurance regulatory commission in any given state, or a call made to the commission’s toll-free number, will also provide information about no credit check car insurance providers in your state.

However, many times the non-credit based car insurance rates are much higher than regular car insurance rates.

The companies using the no credit check tag line on their marketing campaigns are targeting riskier and often more desperate audiences.

Finding a provider that will cover them at anything resembling a reasonable rate may seem like a gift.

Is a credit check necessary to obtain car insurance quotes?

Do all insurance companies run credit checks? Credit checks are usually required to get car insurance quotes. With some car insurance companies, bad credit can increase car insurance rates by 50% or more.

While most consumers consider an insurance company to be in the business of protecting their assets, insurance companies themselves consider their industry to be one of assessing risk.

They’ll certainly help consumers recover their losses after an accident or another incident on the highway, but they are primarily concerned with the likelihood that any given customer will cause such an incident.

In making these considerations, a consumer’s credit score and credit history are two key ways to determine whether or not they’ll be filing a claim with the company during the course of their policy.

Research has shown, numerous times, that consumers with lower credit scores or more derogatory items on their credit reports are more likely to be in an accident than these insurance policyholders who have sterling credit reputations.

The reasons for this are unknown, but the correlation seems to be rather hard to disprove. For this reason, a shoddy credit history will cause an insurance company to charge a slightly higher rate on those insurance customers who have had financial problems in the past.

There are a few ways to get around this, or compensate for the increased rate, that consumers should know.

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If I have bad credit, will my car insurance companies charge more?

Does bad credit affect auto insurance?

Bad credit raises your car insurance rates by $165.39/month on average. Car insurance companies weigh your credit score heavily when determining your rates.

Yes, if you have bad credit, you will have to pay higher rates on your car insurance rates. This is because people with bad credit are looked upon unfavorably. If you have bad credit, you have most likely been unreliable with your financial responsibilities.

This table will show you the average annual car insurance rates based on credit score.

Average Annual Car Insurance Rates by Credit History
CompainesRates with Fair CreditRates with Good CreditRates with Poor Credit
USAA$2,219.83$1,821.20$3,690.73
State Farm$2,853.00$2,174.26$4,951.20
Geico$2,986.79$2,434.82$4,259.50
American Family$3,169.53$2,691.74$4,467.98
Nationwide$3,254.83$2,925.94$4,083.29
Farmers$3,899.41$3,677.12$4,864.14
Progressive$3,956.31$3,628.85$4,737.64
Travelers$4,344.10$4,058.97$5,160.22
Allstate$4,581.16$3,859.66$6,490.65
Liberty Mutual$5,604.24$4,388.18$8,802.22
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You can see that bad credit can cost you big time when it comes to car insurance.

If you have a low credit score, you have most likely missed various credit card and loan payments. While missing a car insurance payment will not affect your credit score, it does show that you are careless. It is that carelessness that an insurance company can use as a reason to raise your insurance rates.

Unreliable and careless people are not considered safe drivers. And if you are not a safe driver, you are a high-risk driver and will have to pay more for insurance coverage.

If I have bad credit, will I have many choices with car insurance companies?

If you have a low credit score or poor credit in general, you will be limited as far as how many different car insurance companies will offer you coverage for your vehicles. Some car insurance companies will not offer insurance coverage to you if you have poor credit. This is because you are considered too much of a risk to insure.

There are, however, some car insurance companies that specialize in offering car insurance coverage for people that have poor credit.

The rates that you pay with these car insurance companies are usually substantially higher than traditional companies. In addition, many of these companies will require a higher down payment to secure coverage. However, these companies do not look at your credit score when extending insurance coverage.

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Finding a Company That Does Not Consider Credit Scores

Do all insurance companies use credit scores to determine rates? No, but most companies do use credit scores.

Since the percentage of companies using credit scores in rate setting is so high, you may find it difficult to locate a car insurance company that does not check credit. Finding one that serves your area may be impossible in some cases.

The best way to discover how to get car insurance with no credit checks is to compare quotes and rate details from many of them.

By comparing, you will find places that don’t check credit, insurers that completely ignore credit ratings when it comes to insurance quotes, or companies that only use them for setting up a payment plan for your rates.

If one insurer is significantly lower than other companies for the same coverage or better, you can feel confident that this company does not factor in the credit history.

Another way to locate companies that do not factor in credit scores is to contact your state department of insurance. They should be able to tell you which companies do not use such criteria, which will be especially important if you have bad credit and want the best price possible on your car insurance.

How do I contact the state department of insurance?

Every state has a regulatory body that certifies individual insurance agencies on a yearly basis (or slightly less frequently).

This agency is responsible not only for documenting an insurance company’s financial position and their ability to pay on insurance claims, but also for documenting how an agency does business, how it determines its rates, and what its average rate is for consumers in that state.

Calling the state Department of Insurance is a great way to find out whether a company requires credit information to get a quote, and whether or not that information can be used to lower or increase the rate.

Customer representatives who work for the department can even search through their database in search of those companies which do not base their policy rates on consumer credit histories and credit scores.

Can I bypass direct involvement with the agency by using a broker?

Another way to potentially escape the damaging effects of a credit check is to use an insurance broker when shopping for policies and delivering policy payments to the insurance agency a customer chooses.

This is because, in many cases, the broker acts as a “middleman” and a payment processor, helping the customer eliminate the risk posed to the insurance agency if they simply do not pay their bill.

After all, the likelihood that a low-credit customer may not pay on their policy is a big part of the reason why their insurance rate is higher than other customers.

When seeking the service of an insurance policy broker, inquire as to how they handle payments and whether or not their service will allow an exemption from standard insurance agency credit checks.

Remember to be honest and open about credit problems, as these individuals are employed to help the consumer, not the insurance agency.

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Understanding Why Credit Affects Insurance Rates

Credit scores are used by most companies to set rates. Credit scores have a strong correlation to a person’s likelihood to make insurance claims.

In fact, people with poor credit scores are much more likely than those with good credit scores to make claims.

Since statistical evidence of this fact came to light, more insurance companies have considered credit scores as one of the factors when determining how much a client will pay for car insurance coverage. Some industry experts state that more than 90 percent of companies now use credit scores in determining rates.

What is the link between credit scores and insurance claims?

The essential goal of an insurance agency, as stated earlier, is to assess risk and charge consumers a rate that compensates for the amount of risk they “inject” into the pool of drivers that an insurance agency covers.

Bad credit means that a customer poses more of a risk on paper, but that may not be the case in reality. After all, even excellent drivers can encounter unexpected financial hardship.

When applying for insurance, be sure to highlight a number of things which point toward a safe driving record.

This can include an accident-free history on the road, a defensive driving class, driver’s education courses, and other ways to prove that bad credit does not equal a bad driver. In many cases, the insurance company will issue discounts for these things that will more than compensate for poor credit history.

Does car insurance use credit scores alone to determine rates?

Studies have shown that there is a distinct correlation between low credit scores and a high incidence of insurance claims. This correlation is the reasoning behind using credit scores as a car insurance rating criteria.

Although you may wonder which car insurance companies do not use credit scores the fact of the matter is that most underwriters look at a driver’s actual credit score as well as other factors such as:

  • Demographics
  • Where you live
  • What you drive
  • Your driving record
  • How your vehicle is used
  • Type of coverage you want

This video goes over some factors used to determine your car insurance rates.

While many of the factors considered contribute to your rate is higher or lower, the inclusion of the credit score has created the most rating tiers.

The use of credit scores in setting insurance rates is somewhat controversial despite its widespread use for many years now.

However, due to consumers’ concerns, most states now have guidelines in place for how insurers can use credit information in rate setting. This provides reassurance for consumers whose credit information is not being used in a standard way throughout the industry.

Why is car insurance credit-based?

As anyone who is familiar with credit scores knows, there is a huge range of possible scores a consumer can have, therefore underwriters have a wide variety of possibilities to consider.

Does car insurance check credit to simply look at good credit versus bad credit? They often actually look at the details of your credit history, as provided by one of the credit reporting bureaus.

Some of the things found on your credit report that can affect your insurance include:

  • Delinquencies
  • Bankruptcy
  • Foreclosure
  • Repossession
  • Loan balance to available credit ratio
  • How many loans and credit cards you have
  • The age of your loans
  • Timeliness of payments

Two companies have designed models to help insurers use credit information for insurance scoring.

ChoicePoint and FICO have made it easier for many insurance companies to use your personal credit score, while many other companies have their own system in place. However, before they can access your information, they must get your permission.

Is it legal for car insurance companies to check my credit score?

The ability of a car insurance company to check your credit score is determined in your own state by your state’s insurance commissioner.

In most states, it is perfectly legal for an insurance company to check your credit.

In the states where it isn’t legal, such as California, insurance companies don’t run your credit to determine your rates. There is also no credit check for auto insurance in Michigan, Hawaii, and Massachusetts.

If you aren’t sure whether this is a legal practice in your state, you can do a search for your state’s department of insurance on the National Association of Insurance Commissioners website, under the States & Jurisdiction Map.

How do insurers weigh rating factors?

Each insurance company weighs rating factors differently.

While your driving record is the factor that is considered first, the other factors each have their own weight as assigned by underwriters of individual insurance companies. This contributes to the variation in insurance price quotes from one company to another.

The use of credit scores for insurance rating is newer than other factors and therefore is not treated uniformly by all insurance companies.

Some give it very little significance while others give it much significance. Thus you may find big differences in your rates when shopping around, especially if your credit score is extremely bad or extremely good.

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Understanding Your Credit Rating

Your credit score is measured by independent organizations called credit bureaus. They take into account factors such as the following:

  • your payment history
  • how much you owe
  • the amount of credit available to you
  • the length of time you have owed money

A good credit score means you can be counted on to fully pay your debt and also signifies your membership among the ranks of reliable and responsible citizens.

“Good” credit ratings are represented by a score of 700+, while scores below 600 are considered “poor.”

Credit ratings are usually determined by one of the three big credit reporting agencies:

  • Equifax
  • Experian
  • TransUnion

Every US citizen is eligible for a free credit report once per year from AnnualCreditReport.com.

You need to know what your credit scores are and what is on your credit report. The best way to know is by ordering a free annual copy of your credit report. By visiting the Federal Trade Commission website, you can find out exactly how to get your report by mail, phone, or online.

Be sure to thoroughly review your report, looking for inaccuracies and errors. If you find any errors, you will need to dispute them so they can be corrected or removed. In this way, you can improve your credit score as much as possible so that you can get the best car insurance rates.

You may also find that you have a poor credit score due to identity theft. If this case, you must report it and take the appropriate steps to repair your credit. You can find more information on the United States Department of Justice website.

In the case of bad credit for which you are genuinely responsible, learn all you can about how to improve your score so that by taking the right action, your insurance rates will be less impacted by it in the future.

When you have ensured that your credit score is as good as it can be, you are ready to start shopping around. Be sure to check out a variety of different insurers and compare prices to make sure you get the best deal possible on your car insurance needs.

How do you protect yourself and your credit rating?

If you are denied car insurance or given a higher rate because of your credit rating, your insurance provider must give you the contact information for the credit reporting agency that delivered your score.

Get in touch with the reporting agency to find out the details of your report.

If you request the information within 60 days of being denied insurance, you are eligible for a free copy of your report.

Once you have all the information at your disposal, you will be able to analyze the results so that you can determine what steps to take in order to improve your credit rating and thus lower your insurance rates.

Compare both no credit check car insurance quotes and traditional car insurance quotes using online tools that provide a wide array of competitive rates.

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How can I save money on my car insurance rates if I have bad credit?

While poor credit is one negative factor in setting car insurance rates, there are some things that you can do to offset the additional cost you may be paying. The first step is to speak directly to your car insurance agent or company and ask if you are eligible for any discounts.

Some of the various discounts that are available with car insurance companies include a good driver discount, good student discount, multi-policy discount, and pay-in-advance discount.

A multi-policy discount is available to you if you have two or more insurance policies with the same insurance company. The policies can be for two vehicles, one vehicle and a homeowner’s policy, or even include a life insurance policy.

A pay-in-advance car insurance discount is what it sounds like. Basically, if you pay for your entire insurance policy up-front, whether for a six-month policy or a 12-month policy, you can receive a discount.

Finally, a good student discount is available to parents who have a teenage driver on their policy. If the teenage driver has at least an 85 average, the policy is eligible for a discount. This is because students who have good grades are considered more responsible and in turn, are considered better drivers.

Does a good driving record help lower my car insurance rates if I have bad credit?

Your driving history can lower your car insurance rates and keep them low even if you have bad credit. Most car insurance companies will look very favorably on a safe driving record, and it may even offset any increase in cost from a poor credit rating.

If you have avoided accidents and have not received any moving violations over the previous three years, you are considered a good driver.

Many car insurance companies offer a good driver discount that can save you as much as 10% off your car insurance rate. The average increase in car insurance rates for poor credit is between 5% and 10%, so it almost is a wash.

How can I improve my credit score to help reduce my car insurance rates?

There are several simple ways to improve your credit score, although most of them take a long time to help. The first way is to make any loan or credit card payments that you have on time. Most credit cards have set payment amounts that are fairly low, so making the payments on time will help raise your credit score.

Another way to help raise your credit score is to keep a low balance on your credit cards. If you have a large amount of credit on your cards, it shows that you are responsible for your finances and your credit, and therefore will help keep your credit score high.

This video will give you some good tips on raising your credit score.

By taking small steps to ensure that you are responsible with your finances, you can save money on your car insurance rates.

Will my credit score affect my fleet insurance rates if I have a business?

Your personal credit score won’t affect your overall rates for your fleet insurance. However, who you choose to drive your vehicles will have an impact on your rates.

If you choose drivers with overall bad credit scores, this can cause your rates to increase.

In order to keep those rates down, you should choose a car insurance company that doesn’t request the social security numbers for your drivers.

Also, choose a company that provides drivers education car insurance discounts if you send your drivers to driving classes to help them be better drivers!

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Remember: Bad Credit Does Not Equal Bad Driver or Bad Person

Financial hardship happens. It’s important to examine all avenues when signing up for car insurance, as this required liability coverage can be had for low rates even with a less-than-stellar financial history at the major credit bureaus.

Always compare rates, investigate the services of a broker, and contact the state regulatory agency for more questions about how credit may, or may not, impact the amount that car insurance companies can charge.

With the right information and the protection of state officials and issuance brokers, consumers can enjoy discounts on their coverage even as they work toward a brighter financial future.

Remember that car insurance is not a monolithic industry; every insurance company offers their own unique assessment of the risk a driver poses to their corporate bottom line, and that can lead to big swings in policy coverage levels, monthly payment amounts, and the amount of emphasis which is placed on a poor or even sterling credit reputation.

Does checking car insurance quotes affect credit score?

No, you will be happy to know that getting car insurance quotes won’t affect your credit score.

Online car insurance comparison tools help consumers view the differences between each insurance company in a convenient, single-web page format. This makes it easy to see where the best car insurance rate comes from, how it is determined, and which factors might have caused a company to charge an elevated rate for coverage.

After your zip code, you will be asked to provide information about yourself, your driving record, your vehicle, and the kind of coverage you want. The information will then be submitted to a variety of car insurance providers serving the area in which you live.

In no time, you will have the quotes you need to compare and contrast for the best price possible for the best coverage possible. Once you start comparing quotes, you will see for yourself how different companies treat the exact same information.

Do your homework and compare quotes carefully to make sure you get the best coverage possible to meet your needs. Get an online rate quote to get started shopping for cheap car insurance with no credit check or car insurance for low credit scores! Enter your ZIP code below now!

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