People with bad credit may have to pay more for car insurance than people with good credit. Getting cheap car insurance is possible even if you have bad credit if you know how rates are calculated. Let’s discuss how insurance companies look at credit scores.
After that, we'll talk about how much more drivers with bad credit must pay for car insurance. Finally, we'll give you some tips on how to save money on your policy, like looking around for the cheapest insurers for drivers with bad credit. There is also a list of things you can do to raise your credit score.
Many things affect how much you pay for car insurance, like your age, how many claims you've made, and how safe you are behind the wheel. The company that gives you the best deal on car insurance may change based on the type of driver you are.
| Company | Poor credit rate | Good credit rate |
|---|---|---|
| Farm Bureau | $223 | $140 |
| Erie | $238 | $107 |
| American Family | $239 | $146 |
| Nationwide | $242 | $170 |
| State Farm | $247 | $105 |
| Progressive | $265 | $162 |
| Travelers | $294 | $146 |
| Auto-Owners | $296 | $126 |
| Allstate | $309 | $201 |
| Farmers | $362 | $237 |
| USAA | $168 | $97 |
State Farm and Travelers offer some of the best prices if you have an accident or ticket on your record.
| Company | Monthly rate | Annual rate |
|---|---|---|
| USAA | $168 | $2016 |
| Nationwide | $242 | $2904 |
| State Farm | $247 | $2964 |
| Progressive | $265 | $3180 |
| Travelers | $274 | $3288 |
| Allstate | $309 | 3708 |
Between states, the average cost of car insurance changes significantly. We will present a list of the average car insurance rates by state.
| State | Average annual full coverage premium with poor credit | Average annual fullcoverage premium with excellent credit |
|---|---|---|
| Alabama | $3,270 | $1,614 |
| Alaska | $2,697 | $1,771 |
| Arizona | $3,258 | $1,584 |
| Arkansas | $3,849 | $1,610 |
| California | $2,291 | $2,291 |
| Colorado | $3,535 | $1,756 |
| Connecticut | $2,900 | $1,261 |
| Delaware | $3,522 | $1,773 |
| Florida | $6,378 | $2,673 |
| Georgia | $3,330 | $1,843 |
| Hawaii | $1,275 | $1,275 |
| Idaho | $1,868 | $1,016 |
| Illinois | $2,874 | $1,550 |
| Indiana | $2,095 | $1,125 |
| Iowa | $2,343 | $1,135 |
| Kansas | $3,124 | $1,638 |
| Kentucky | $3,911 | $1,807 |
| Louisiana | $5,532 | $2,470 |
| Maine | $1,640 | $842 |
| Maryland | $3,206 | $1,700 |
| Massachusetts | $1,262 | $1,262 |
| Michigan | $6,870 | $2,073 |
| Minnesota | $3,287 | $1,520 |
| Mississippi | $3,232 | $1,544 |
| Missouri | $3,145 | $1,637 |
| Montana | $3,002 | $1,655 |
| Nebraska | $3,037 | $1,376 |
| Nevada | $4,027 | $2,480 |
| New Hampshire | $2,337 | $1,021 |
| New Jersey | $3,211 | $1,376 |
| New Mexico | $2,582 | $1,410 |
| New York | $7,186 | $2,581 |
| North Carolina | $1,813 | $1,391 |
| North Dakota | $2,445 | $1,089 |
| Ohio | $2,229 | $1,065 |
| Oklahoma | $3,571 | $1,748 |
| Oregon | $2,375 | $1,241 |
| Pennsylvania | $2,915 | $1,856 |
| Rhode Island | $3,085 | $1,687 |
| South Carolina | $2,950 | $1,251 |
| South Dakota | $3,288 | $1,270 |
| Tennessee | $2,761 | $1,231 |
| Texas | $3,304 | $1,752 |
| Utah | $2,661 | $1,277 |
| Vermont | $1,822 | $949 |
| Virginia | $2,533 | $1,195 |
| Washington | $1,468 | $1,393 |
| Washington, D.C. | $3,337 | $1,861 |
| West Virginia | $2,688 | $1,348 |
| Wisconsin | $5,631 | $1,076 |
| Wyoming | $2,583 | $1,323 |
A bad credit can lead to higher insurance rates by 72%, while good credit can save money.
Credit score, or FICO Score, significantly impacts car insurance costs. It is based on five factors: past borrowing history (35%), current owed amount (30%), credit history (15%), different credit types (10%), and new credit (10%), with scores ranging from 300 to 850.
| Tier | FICO Score |
|---|---|
| Excellent | 800-850 |
| Very good | 740-799 |
| Good | 670-739 |
| Fair | 580-669 |
| Poor | 300-579 |
Credit bureaus create an insurance score based on a person's entire record, not just their creditworthiness. This score determines the riskiness of an individual for auto insurance companies. Rates may vary by state, with some relying on driver history and other factors. In some cases, drivers may be fined for not having a credit history, which insurance companies view as the same as having a bad one.
Getting insurance quotes won't hurt your credit score. Insurance companies check your credit when they give you a quote, but lenders don't see it because it's called a "soft pull." Getting as many questions as you want does no harm to your credit score. This is because the insurance company only looks at information from your credit report and not your real score.
Insurance quotes do not affect credit scores, as insurance companies use a soft pull inquiry to check credit reports without showing up to lenders.
Your credit-based insurance score is only one thing an insurance company can use to decide if you are a good risk. Regarding auto insurance, other things that might be considered are the age of the driver, the make, model, and age of your car, and even the number of miles you drive each year. You can connect with your insurance company to determine if a credit-based insurance score was used to approve and rate your coverage. You can also ask what risk category they put you in.
Telematics-based insurance companies are one of the best choices for drivers with bad credit regarding insurance. These companies track how much you drive and use that information to determine how much your payments will be.
Factors like debt, credit history, credit types, and past bill payments influence credit scores. To better up your credit score, set up automatic bill payments, pay off balances monthly, and engage with credit bureaus. Check your credit score annually to identify any mistakes, limit credit use to 30% of available credit, and reduce the number of credit requests. As insurance companies use, a soft credit pull won't harm your credit score. Regular bill payments, business with credit bureaus, and avoiding late payments can help improve your credit score.
The auto insurance rates published in this guide are based on the results of research completed by Way.com’s data team. Using a mix of public and internal data, we analyzed millions of rate averages across U.S. ZIP codes.
Quotes are typically based on a full coverage policy average unless otherwise noted within the content.
These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes will differ. Given this, it’s important to go through our insurance steps form to find how much you can save with way.com
Way.com’s Insurance Broker Quote Data
If you have bad credit, you can still get cheap car insurance by following these tips: Pick an insurance business based on telematics: A telematics-based provider, also called usage-based insurance, figures out how much your car insurance will cost by looking at how you drive.
Insurance companies point to studies that show drivers with poor credit are more likely to file claims. This means these drivers are a bigger risk for the insurance company and may cost more. Your car insurance rates go up if you bring more risk and cost.
We suggest that you look at the insurance companies that offer the lowest rates by state. Companies that sell car insurance say that people with bad credit are on the potential side to file claims, so they charge them more for coverage. You can still save money, though, by getting multiple prices and shopping around for deals.
Insurance companies point to studies that show drivers with bad credit are more likely to file claims. This means these drivers are a bigger risk for the insurance company and may cost more. Your car insurance rates go up if you bring more risk and cost.
Based on our rate predictions, the best companies for cheap car insurance for people with bad credit are USAA, Nationwide, and Progressive.
USAA, State Farm, and American Family offer the cheapest car insurance rates for people who drive badly. You should know that USAA only covers military people, veterans, and their families when they get car insurance. State Farm and American Family are your best options if you're a regular driver.
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