Compare Best Car Insurance Companies That Don’t Use Credit Scores [2023]

Looking to purchase car insurance with no credit check is going to be difficult. 

Insurance companies believe that a low credit score makes you more likely to file a claim. Basing car insurance rates on credit score is mostly unfair, outlawed in six states, and, unfortunately, an excepted practice.

The great news is participating in usage-based car insurance programs can lower your rates by up to 50%. If you want to find the best car insurance for bad credit, this is a good place to start.

Read on to see bad credit car insurance rates and discounts. Enter your ZIP code to compare free car insurance quotes from top companies.

What are the best car insurance companies that don’t use credit scores?

Do all insurance companies use credit scores to determine rates? No, but most companies do. Getting auto insurance with no credit check from a company should actually raise a red flag or two. Companies generally want to be mindful of a driver’s credit score, and if they don’t care, chances are they don’t mind bending other rules. 

Research has shown, numerous times, that consumers with lower credit scores or more negative items on their credit reports are more likely to be in an accident than 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 slightly higher rates to insurance customers who have had financial problems in the past.

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. 

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What are the best car insurance companies for drivers with bad credit?

We’ve taken a look at the top insurance companies in the financial market to help you find the cheapest bad credit car insurance.

How much is bad credit car insurance?

Let’s first explain what bad credit is. Credit can be divided into three ranges.

• Good Credit (670-739)
• Fair Credit Score (580-669)
• Poor Credit Score (300-579)

If you know your score or the range of your score, you can get a general idea of how much your rates will be with each company.

 

In general, the companies that offer the cheapest rates for drivers with bad credit are USAA, Nationwide, Geico, and American Family but since so many other factors go into determining your rate, it’s good to get multiple quotes.

However, also important to consider is which companies increase rates more for drivers with bad credit. The companies that are easier on drivers with bad credit as compared to those with good credit are Travelers, Progressive, Farmers, and Nationwide.

Bad credit raises your car insurance rates by $165.39/month on average. 

Companies often look at particular parts of your credit report rather than basing their decision on only the score.

How does credit affect car insurance rates state-by-state?

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

In most states, it is perfectly legal for an insurance company to check your credit. That’s why it’s difficult to find car insurance without a credit check.

In the states where it isn’t legal, such as California, insurance companies don’t run your credit to determine your rates. There are additional credit-check car insurance laws in Michigan, Hawaii, Oregon, Utah, and Massachusetts.

For all other states, expect a difference in rates for drivers with good credit and bad credit.

In New Mexico, North Carolina, and Rhode Island, drivers with bad credit will pay car insurance rates that are up to only 30 percent higher than those that have good credit.

In Minnesota, Florida, New York, and Vermont, drivers with bad credit will pay car insurance rates that are approaching 50 percent higher than those that have good credit.

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 & Jurisdictions map.

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 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’re eligible for any discounts.

Some of the 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 homeowners policy, or even 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 upfront, 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, more likely to be good drivers.

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How much is usage-based car insurance for drivers with bad credit?

Usage-based car insurance is an excellent way to prove to insurance companies that people with bad credit aren’t necessarily bad drivers.

Many car insurance companies offer a discount program that bases your car insurance rates on either driving habits or how much you drive. Some companies have both.

 

You can participate in these programs by simply plugging their device into your car or downloading and using their driving app.

How does credit score affect car 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 premium that you pay monthly or yearly.

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

Your credit history is one of the newer variables that insurers now consider when setting your car insurance rates. How you’ve handled your credit in the past is a significant factor in how much you’ll 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 tagline in their marketing campaigns are targeting a riskier and often more desperate audience.

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

Why does your credit affect car insurance rates?

Credit scores are used by most companies to set rates. Credit scores have a strong correlation with 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% of companies now use credit scores in determining rates.

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How much does my credit score weigh into my car insurance rates?

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, which is assigned by the underwriters of each individual insurance company. 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.

Credit scores vs. credit-based insurance scores: What’s the difference?

Credit scores and credit-based insurance scores are two entirely different things. 

To any entity that looks at your credit score, even if it’s not a car insurance company, the credit score is only a prediction to show how likely it is you will go three months without paying your bills in the next two years. 

Credit-based insurance scores, on the other hand, are designed to predict whether or not you’re likely to file an insurance claim, so insurance companies likely look at the individual items on your credit report.

What do car insurance companies look for on my credit report?

Car insurance companies may look for particular things on your credit report rather than the entire credit score to determine your credit-based insurance score. 

Car insurance companies like to see the following on your credit report:

• Long-established credit history
• No late payments or past-due accounts
• Open accounts in good standing

Car insurance companies don’t want to see the following on your credit report:

• Past-due payments
• Accounts in collection
• A high amount of debt
• The number of accounts
• comparing total loans against your available credit
• Not enough credit or history
• Multiple credit inquiries

Other things they may see but not necessarily hold against you:

• Bankruptcy
• Foreclosure
• Repossession

As anyone who’s 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.

Do car insurance companies 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.

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, and some companies have their own system in place.

However, before they can access your information, they must get your permission.

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How do I improve my credit and get cheaper car insurance?

How can I get my credit score up to bring my car insurance rates down?

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 credit limit on your cards, it shows that you are responsible for your finances and your credit, and therefore will help keep your credit score high.

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

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

You may be asking, can my driving history lower my car insurance rates? In short, yes, and you can 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 haven’t had any accidents or moving violations over the previous three years, you’re considered a good driver.

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