How to Find the Best Car Insurance with Bad Credit
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A low credit score can make certain things difficult, like renting a home or taking out a car loan. But what about getting car insurance? In several states – such as California and Massachusetts – car insurance companies aren’t allowed to use your credit score to determine your car insurance rates, but in most states, they can.
So what can you do to get cheap car insurance with a poor credit score? Let’s take a look at how credit scores impact your auto insurance rates and which auto insurance companies offer drivers the best car insurance with bad credit.
How Does Bad Credit Impact Your Insurance Rates?
Before we get started, it’s worth pointing out that many factors affect your auto insurance rates, so your credit score may not be the most important factor to consider. Your age, location, and driving history all play a role too.
But if you live in a state where insurers can take your credit score into account when setting car insurance premiums, you’ll want to keep an eye on your credit history.
According to Consumer Reports, drivers with poor credit scores can expect to pay an average of $1,301 more in premiums every year. Even a good credit score can mean paying $68 to $526 more than drivers with an excellent credit score.
You can learn more about credit reports and how to get a free credit report here.
Keep in mind that your credit-based insurance score isn’t the same as your FICO credit score, and different insurance providers may use their own methods to calculate your rates. For example, in Texas, your insurance credit score may be based on:
- The number of credit cards or accounts you have open
- The total amount owed
- Your past-due payment record
- The number of credit checks conducted
Texas also provides exceptions if other factors have damaged your credit score, like identity theft, the death of a family member, loss of employment, or divorce.
Be sure to shop around for car insurance after any major financial changes – including paying off debt – since you may be able to find lower rates elsewhere. Enter your ZIP code here to compare auto insurance quotes in your area:
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The Best Car Insurance with Bad Credit
To put together our list of the best car insurance companies for drivers with bad or fair credit, we primarily looked for companies with the cheapest rates. We’ve also looked into what car insurance discounts they offer since safe driver discounts may still be available to drivers with a good driving record but a lower credit score.
But remember, the cheapest option may result in higher out-of-pocket insurance costs, so be sure to shop around for the right level of insurance coverage you need.
Here are our picks for the best car insurance for bad credit drivers:
Depending on where you live, Grange may be a good option for drivers with bad credit. In California, the average rate for Grange insurance is a low $62 per month – and car insurance companies aren’t allowed to use your credit score in that state.
Even if you don’t live in California, you can benefit by bundling your homeowner’s or renter’s insurance or paying in full for a prompt payer discount.
You can also get a discount for using Grange’s OnTrack safe driving program, which monitors your driving habits for 90 days before calculating a discount.
Although Grange is one of the cheapest companies for drivers with bad credit, it’s been in business for 87 years and has an A+ accreditation from the BBB. It also has a rating of 4.04/5 stars based on 108 customer reviews.
Nationwide is another insurance company that gets high marks from drivers with bad credit, with a customer rating of 4/5 out of 2999 reviews on Clearsurance and an A+ accreditation from the BBB.
Nationwide is also transparent about how it determines your credit-based insurance score, pointing out that age, sex, and marital status don’t factor into this score (but may still be factored into your overall insurance rates).
Nationwide will also reconsider your premium if your credit score has been affected by divorce, military deployment, a catastrophic event, and other mitigating factors.
Other perks include discounts for going paperless and setting up automatic payments, as well as an optional Vanishing Deductible program.
Travelers Insurance offers several great discounts, making it easy to save on insurance costs even if you have bad credit. These include 2-3% off for paying with an electronic funds transfer, 7.5% for paying in full, and 3-10% for getting a quote before your existing insurance policies end.
Clearsurance reports that Travelers Insurance is higher than the national average for teen drivers but about average for single adults and seniors. Travelers has a rating of 4.08/5 based on 1729 customer reviews.
Travelers considers factors in your credit history, such as bankruptcies and foreclosures, but excludes credit inquiries initiated by third parties. Also, they won’t refuse insurance to drivers who don’t have sufficient credit information.
Direct Auto promises to provide affordable insurance to eligible drivers, even high-risk drivers and those with a spotty insurance history – although it’s only available in 16 states, including Colorado, Michigan, and Pennsylvania.
According to our research, Direct Auto’s average rates are $173 for a male driver, $168 for a female driver, and $190 for drivers with an accident on their record. You can also get SR-22 insurance through Direct Auto if you have a DUI.
Other benefits include flexible payment options, including credit cards, debit cards, and even cash at a nearby Direct Auto location.
Direct Auto has a score of 4.24 on Clearsurance but only 24 reviews – suggesting that it isn’t as widely available or well-known as some of the other options on our list.
Dairyland Insurance is based in Wisconsin but offers car insurance in dozens of states. Rates range from $43 in Idaho all the way up to $366 in North Carolina.
Dairyland focuses on low-cost car insurance, including insurance for high-risk drivers, drivers with bad credit, and drivers with an international license. Other options include motorcycle and off-road vehicle insurance.
Dairyland has a rating of 3.83 on Clearsurance and a 4.5-star rating on Trustpilot, with many customer reviews mentioning their customer service.
Dairyland also caters to Spanish speakers, with bilingual insurance agents and a Spanish-language version of their website.
Compare Car Insurance Rates Today
Car insurance companies consider dozens of factors when setting your auto insurance rates – including your credit score. Good drivers and high-risk drivers alike can face higher rates when trying to find the best car insurance with bad credit. By shopping around for coverage options from multiple companies, you’ll be able to compare insurance policies and find the best rates for you.
Compare.com makes it easy to find the best auto insurance rates, whether you want the cheapest car insurance or a full coverage auto insurance policy. Get a quote from dozens of providers with one easy search:
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Find the Best Cheap Car Insurance Today
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