Cheap Car Insurance Companies for Drivers With Bad Credit
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If you have bad credit you might know your options for financing a car or renting an apartment can be limited (and much more expensive). But what many need to learn is that bad credit can also mean higher auto insurance premiums.
When your credit score is low, certain auto insurance companies may use it as a rating factor to determine your premiums, making them higher. Fortunately, some insurers don’t consider your credit score when choosing your rate.
In this article, we’ll look at the cheapest car insurance companies for drivers with bad credit, what no credit check auto insurance is, and the best ways to save on car insurance with bad credit.
- Many car insurance companies use your credit score as a rating factor to determine their premiums.
- No credit check auto insurance policies do not use your credit score as a rating factor.
- The cheapest car insurance companies for drivers with bad credit include American National, State Farm, General Casualty, American Family, and Country Financial.
- You can save on car insurance with bad credit by taking advantage of discounts, shopping around for quotes, and taking steps to increase your score over time.
The Cheapest Car Insurance Companies for Drivers With Bad Credit
Auto insurance companies typically use credit scores as one of the factors in determining rates for potential policyholders. Credit scores are calculated based on an individual’s credit history, which indicates an individual’s creditworthiness and ability to pay bills on time.
The difference between “poor credit” and “fair credit” is typically determined by the credit scoring range used by the insurance company. However, generally speaking, a “poor credit” score is 600 and under, and a “fair credit” score is 650-700.
Your credit score can affect how much of a risk insurers believe you are. For example, drivers with fair and poor credit scores may be considered higher risk and have to pay more for their premium than a driver with excellent credit.
It’s important to note that your credit score isn’t the only factor insurance companies use to determine rates. Other factors such as location, age, driving history, and the type of coverage also play a role. Additionally, some states prevent the use of credit scores as a factor in determining rates.
Remember, if you have a poor credit score, you should shop around and compare rates from different insurance companies, as some may be more lenient with credit scores than others. The following insurance companies are some of the cheapest for drivers with bad credit scores.
|Insurance Company||Fair Credit Score (Average Biannual Premiums)||Poor Credit Score (Average Biannual Premiums)|
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American National is an insurance company based in Galveston, Texas, that operates in all 50 states and the District of Columbia. It provides various insurance products, including auto, life, health, and business insurance. American National offers excellent service for drivers who bundle insurance policies, pay low rates, and access rental car protection policies.
When it comes to drivers with bad credit, American National offers no-credit-check auto insurance options at competitive rates, making them one of the best options for those with low credit scores.
Their average biannual premiums are about $1034 for drivers with fair credit and $1765 for drivers with poor credit.
American National provides a variety of driver-based, policy-based, and bundling discounts to their policyholders. Customers appreciate the benefits of loyalty and bundling programs for home, auto, and life insurance. Other standard discounts are available if you are a safe driver and have up-to-date safety equipment in your car.
Country Financial is an insurance company based in Bloomington, Illinois. They are a leader in the insurance industry, offering a range of no-credit-check auto insurance policies. They understand the needs of drivers with bad credit and offer discounts and other opportunities to help them get coverage at a lower cost.
Country Financial is another good option for those with bad credit because the company is known to use a variety of factors when determining rates, not just credit scores. The company also offers a “Credit for Good” program that rewards customers who have improved their credit scores over time.
On average, their biannual premiums for drivers with fair credit are $1529, and for drivers with poor credit, they are $2265.
Country Financial has rates that are significantly lower than the national average. You can further reduce those rates by installing an anti-theft device or working in certain professions.
Although the company does not provide the most options for customization, you can add rental and trip interruption coverage, $800 in coverage for personal items damaged during a covered claim, and coverage for your windows, windshield, and headlights.
General Casualty Company of Wisconsin, now known as QBE General Casualty, offers competitive car insurance rates for drivers with fair or poor credit. QBE Insurance owns General Casualty and is one of its North American subsidiaries.
QBE quotes average biannual premiums of $1675 and $2346 for drivers with fair or poor credit scores respectively. They also offer a range of discounts drivers with poor credit can take advantage of, such as multi-policy, safe driver, and good student discounts.
American Family Insurance, also known as AmFam, was founded in 1927 as an auto insurance company that marketed itself to farmers. Over time, the company’s consumer base and product line grew, and its name changed.
Now the tenth-largest insurance provider in the United States, American Family is a private mutual company focusing on property, casualty, and auto insurance, commercial, life, health, and homeowner’s coverage, and investment and retirement planning products.
American Family ranks above the national average in most well-known customer satisfaction surveys and studies. For example,The Better Business Bureau gives it an A, which is higher than the national average.
American Family offers competitive rates for drivers with poor credit. They offer average six-month premiums of $1694 (for fair credit scores) and $2417 (for poor credit scores).
State Farm is a large, well-known insurance company that offers a variety of insurance products, including auto insurance. The company was founded in 1922 and is based in Bloomington, Illinois. State Farm is the largest auto insurance provider in the United States, offering coverage in all 50 states.
For those looking for auto insurance with fair or poor credit, State Farm’s biannual premiums average about $1700 and $3600, respectively. However, State Farm offers a program to help lower your premium.
The State Farm Drive Safe & Save program assesses your driving performance and awards discounts based on data collected from an app and a beacon Bluetooth device or OnStar. Anyone can sign up for State Farm Drive Safe & Save at no additional cost.
State Farm is an excellent insurance provider, especially if you need multiple policies. The company offers a variety of insurance products at lower-than-average rates, including auto, home, renter’s, condo, and life insurance.
It also provides a variety of auto insurance discounts, including good student and good driver discounts, as well as helpful customer service, which can make things easier if you need assistance.
State Farm is also a good option for those who prefer to manage their insurance policies online. Its mobile app, which allows customers to pay bills, file claims, and request roadside assistance, has been well-received.
What is No-Credit-Check Auto Insurance?
No-credit-check auto insurance is an option provided by some companies that allow drivers who have bad credit to purchase car insurance without having their credit scores affect their rates. These policies rely on other rating factors, such as driving record, age, type of vehicle, and location to determine your premiums.
When looking for a no-credit-check auto insurer, you should find a few and compare their rates since the premiums may be higher than with standard car insurance companies.
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Which Car Insurance Companies Don’t Use Credit Scores as a Rating Factor?
Some auto insurance companies may not use credit scores as a rating factor in their underwriting guidelines. However, it is essential to note that most major insurance companies do because it’s standard practice in the industry.
Additionally, some states prohibit using a credit score as a rating factor for auto insurance. As a result, insurance companies in California, Hawaii, Massachusetts, North Carolina and others won’t look at your credit score.
There are only a few options if you browse for insurance companies that overlook credit scores. However, if finding a company that does not consider credit is your top priority, here are two types of auto insurance that may not require a credit check to be approved.
If you choose usage-based insurance, the distance you drive rather than a fixed annual or semi-annual rate determines your monthly premium. The policy is also known as pay-per-mile insurance, a less expensive option for infrequent drivers. Some usage-based insurance companies will only check your credit score if there is a fixed premium.
Here are some usage-based insurance companies that might offer coverage without requiring a check:
- Root Insurance
- Milewise (Owned by Allstate)
- SmartMiles (Owned by Nationwide)
Usage-based insurance may not be appropriate for drivers who travel long distances. Driving daily, such as on a regular commute to work or school, can make the policy more expensive than traditional car insurance due to the pricing structure.
Telematics refers to the wireless communication of devices. It allows insurers to collect data about a customer’s driving habits from a small in-car tracking device or an app on your phone.
A telematics-based insurance premium looks at how safe (or unsafe) you drive, rather than a flat monthly rate or a rate based on specific distance traveled. Therefore, even if you have a low credit score, you may be able to make up for it by demonstrating safe driving skills.
The policy enables insurance companies to reward safe driving with discounts while collecting massive amounts of data about how and when their customers drive. Consider telematics-based insurance if you’re worried about getting expensive car insurance quotes because of a poor credit score.
Some telematics-based insurance programs that may not require a credit check are:
- Progressive Snapshot
- State Farm Drive Safe and Save
- Farmers Signal
- Geico DriveEasy
- Allstate Drivewise
How Do You Save on Car Insurance if You Have Bad Credit?
There are several ways to save on your car insurance policy if you have bad credit. The most important thing you can do is to shop around and compare quotes from multiple providers. It’s actually the only way to ensure you get the best rates possible.
Additionally, you can save on your premiums by taking advantage of any discounts your chosen insurer offers, such as good driver, multi-policy, or multi-vehicle discounts.
Other ways to save on your car insurance include:
- Increase your deductibles: With full coverage, you have a collision and a comprehensive deductible. Increasing one or both will generally lower your premium, but if you file a claim for vehicle damage, you will have to pay more out of pocket.
- Consider your insurance policies: Skimping on coverage isn’t the best way to save money because it can cost you more if you get into an accident. However, you may find that you may be paying for coverage options you no longer require. For example, if you are currently paying for new car replacements or accident forgiveness, you can save money by removing them from your policy. Speak with your insurance agent to determine what types and levels of coverage are appropriate for you.
Finding affordable car insurance when you have bad credit can be difficult, but isn’t impossible. With the right strategy and provider, you can access great coverage for a reasonable price.
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How to Raise Your Credit Rating
According to the Federal Trade Commission (FTC), the lower a driver’s credit score, the more likely they are to file a claim. As such, improving your credit score is essential to get better car insurance rates.
Here are five tips to help improve your credit score and get cheaper car insurance:
- Set up automatic bill payments. Automating payments will help you avoid late fees and give creditors the confidence that you’ll make payments on time.
- Pay off balances every month. Paying off your monthly balances will help keep your credit utilization low and demonstrate that you can handle debt responsibly. The more credit you keep available, the less risky you will appear to your lender. Using only 30% or less of your available credit is best when building and maintaining a good credit score.
- Work with credit agencies to bump your credit score. If you have negative marks on your credit report, you can usually remove them by working with the three major credit bureaus.
- Avoid applying for new accounts for a while. Applying for too many new lines of credit can cause your score to drop, so it’s best to put a hold on applying for new ones until your score improves.
- Dispute errors. If you find any errors on your credit report, dispute them in writing with the credit bureau to improve your credit score.
Factors Influencing Insurance Rates
Although credit score plays a role in determining car insurance premiums, here are some other factors that influence rates:
- Driving History: One of the essential factors in the cost of your car insurance is your driving record. Because insurance companies assume you’re a higher-risk driver, they’ll increase your rates if you have a history of traffic violations or driving-related offenses.
- Age: Rates are almost always higher for young drivers under 25 and even more for males under 25. Your rates should decrease as you get older before they start creeping up again when you’re 65 or 70.
- Gender: Insurers have discovered that boys and young men are more likely than other people — even young women — to be involved in car accidents. Young men are more likely to buy a sports car, drive fast, or take risks behind the wheel making them riskier drivers.
- Claim History: Insurance companies dislike having to pay claims. If you’ve recently filed one or more claims, your insurer will view you as a high-risk driver and charge you higher rates in the future or even deny you coverage entirely. Accident claims in which you were not at fault might not affect your rate depending on the insurer.
- State and City/County: Auto insurance prices vary considerably by state because of differences in car insurance laws and requirements. Living in a state with extremely high or extremely low rates or a high-crime area can significantly impact your car insurance quotes.
Depending on your situation, many other factors can affect how much you pay for your policy.
Frequently Asked Questions About Getting Cheap Car Insurance With Bad Credit
Do they check your credit score when you apply for car insurance?
Auto insurance companies commonly use credit scores to determine rates for potential policyholders. Credit scores are calculated based on a person’s credit history and can indicate a person’s creditworthiness and ability to pay bills on time.
Who has the cheapest car insurance for bad credit drivers?
No single car insurance company provides the most affordable rates to all drivers. Rates vary greatly depending on factors such as age, marital status, and driving history, but comparing rates from multiple companies is the best way to find the cheapest insurance. Competitive rates have been found with American National, Country Financial, QBE General Casualty, American Family, and State Farm.
Which car insurance companies do not consider credit score when determining rates?
There are a few options if you are looking for insurance companies that do not use credit scores. However, rather than looking for specific companies, you might be better off looking for particular types of insurance, such as telematics insurance, based on your driving habits or how much you drive.
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