Best Auto Insurance Companies for Bad Credit (2023)
Rates for bad credit car insurance can cost $100 or more monthly, but some companies are more affordable. Read on to learn how you can get the best rates.
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Written by
Rachel Bodine |
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Reviewed by
Daniel Walker
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UPDATED: Aug 16, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Aug 16, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Drivers with low credit scores pay more for insurance than people with higher scores
- Friendly companies for low credit scores are Nationwide, USAA, and Geico
- While you can save money by looking for discounts and raising your deductible, you can reduce your rates permanently by increasing your credit score
Many factors affect your car insurance rates. Some are obvious, and it’s easy to understand why your age, location, and car affect your rates.
One factor that often surprises people is credit scores. Drivers with good credit scores pay less for their insurance than people with lower scores. Finding cheap car insurance with poor credit can be challenging, but there are ways to save.
One of the best ways to find affordable insurance with a poor credit score is to shop for the companies offering the lowest rates. Companies like Nationwide and USAA provide affordable rates for people with low credit scores.
When you need car insurance for bad credit, you should compare rates with as many companies as possible. Then, explore your options to further your savings and improve your credit score.
Table of Contents
Best Car Insurance Companies for Drivers with Bad Credit
A bad credit score can lead to higher interest rates, fewer loan options, and missed job opportunities. It also leads to higher insurance rates. So what counts as a bad credit score?
Credit scores fall into the following categories:
- 300 to 579 – Poor
- 580 to 669 – Fair
- 670 to 739 – Good
- 740 to 799 – Very good
- 800 to 850 – Excellent
Drivers with a poor credit score pay $100 more on average compared to people with very good credit. However, companies have unique formulas for determining rates; some are less harsh on credit scores than others.
Some of the best companies for bad credit car insurance are USAA, Nationwide, Geico, and American Family. On the other side, companies like Progressive, Farmers, and State Farm have some of the highest rates for car insurance with bad credit.
When you’re shopping for car insurance, you shouldn’t look at just the big companies. Smaller local providers might be more affordable than big-name insurance.
Which companies don’t use credit scores?
Unfortunately, there aren’t many auto insurance companies that don’t check credit scores. About 95% of all standard car insurance providers use a credit check. The only exception is in states that banned car insurance bad credit rate increases. The following states prohibit insurance companies from checking credit to determine rates:
- Washington
- Michigan
- Hawaii
- Massachusetts
- California
The other 45 states, along with Washington D.C., allow for credit checks, so there’s a good chance your score will shape your rates.
Many states allow credit scores to determine your rates but make it illegal for a company to deny you coverage based on a credit check. Companies that offer high-risk insurance are always an option if an insurer rejects coverage due to your credit score.
High-risk insurance works for drivers that other companies pass on, including people with extremely low credit scores. Your rates will be higher, but you’ll at least have the coverage you need.
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What are the best companies for people with poor credit scores?
While you have an idea about which companies treat low credit scores the best, you can get a better idea below.
Before you explore some of the best companies for low credit scores, remember that insurance rates are based on more than your score. While a company can have a reputation for low rates for one factor, it doesn’t necessarily mean it will be the lowest price for you.
Farm Bureau
When it comes to the overall cheapest rates for bad credit scores, Farm Bureau usually offers the lowest rates.
Farm Bureau has excellent rates for customer service and insurance options, and most people enjoy their time with the company. However, you’ll need to be a Farm Bureau member to take advantage of the low rates.
Geico
Geico offers one of the lowest rates for people with low credit scores. While you should always check quotes from other companies, the average Geico rate for people with low credit scores is $157 a month.
Nationwide
Although Nationwide doesn’t match Geico for low prices, it does fairly well for people with poor credit scores. The average Nationwide customer with a low credit score pays $167 a month.
USAA – Best for Military Families
USAA usually has the lowest rates of any provider, but not when it comes to poor credit scores. However, you might find lower rates with USAA due to other factors.
To be eligible for USAA coverage, you must be an active or retired military member or an immediate family member.
Grange – Best Small Market Company
Grange offers the best rates for poor credit scores out of all providers. The only reason it doesn’t rank higher is that it only offers coverage in 18 states:
- Alabama
- Georgia
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Maryland
- Minnesota
- Missouri
- North Carolina
- Ohio
- Pennsylvania
- South Carolina
- Tennessee
- Virginia
- West Virginia
- Wisconsin
The typical driver with poor credit scores pays about $160 a month.
While many small car insurance companies lack the options of bigger providers, Grange offers a variety of coverage options and add-ons like GAP coverage and identity theft protection.
How Car Insurance Rates are Affected by Credit Score
Although credit scores are just one factor in setting your insurance rates, it’s an important one. Check the rates below to see how companies charge different credit score groups for insurance.
As you can see, there’s a significant difference in rates between the excellent and poor credit groups. However, the gap is less with companies like Geico and Nationwide, so comparing quotes is vital.
Why Drivers with Poor Credit Pay More for Car Insurance
Most auto insurance companies consider drivers with a low credit score high-risk just as it would younger drivers or those with multiple traffic violations. Because of this, rates for these drivers are likely to be higher than average.
The Best Car Insurance Companies for Drivers With Good Credit Scores
People with good or very good credit scores typically have the best rates for their insurance. Check the table below to see which companies have the best rates for people with good credit scores.
Insurance Company Rates with Good Credit
American Family $1,386
Farmers $1,674
Geico $984
Liberty Mutual $2,120
Nationwide $1,445
Progressive $1,310
State Farm $1,091
Travelers $1,287
Usaa $753
Allstate $1,993
Average $1,477
State Farm takes the lead for affordable rates when you have a good credit score, followed by Erie, Geico, Travelers, and Progressive. Although rates vary, the average driver with good credit will pay around 77% less for insurance than those with bad credit.
The Best Car Insurance Companies for Drivers With Fair Credit Scores
The better your credit score, the better your rates will usually be. That means you'll improve your car insurance rates if you bump your credit score from the poor range to anything between 580 to 669.
To get a little inspiration to improve your score, consider how much companies charge for people with fair credit scores.
Insurance Company Rates with Fair Credit
American Family $1,635
Farmers $1,926
Geico $1,197
Liberty Mutual $2,712
Nationwide $1,595
Progressive $1,655
State Farm $1,411
Travelers $1,534
Usaa $910
Allstate $2,362
Average $1,781
When you get into the fair range for your credit score, Geico and USAA offer some of the cheapest rates. While Nationwide offers the cheapest rates for people with poor credit scores, other companies catch up for better scores.
Car Insurance for People With Poor or No Credit
If a car insurance company can’t find credit information about you, it treats you like drivers with low credit scores. You’ll pay more for your car insurance than people with good coverage and less than people with very low scores.
Insurance Company Rates with Poor Credit
American Family $2,432
Farmers $3,233
Geico $1,781
Liberty Mutual $4,256
Nationwide $1,988
Progressive $2,471
State Farm $2,398
Travelers $2,323
Usaa $1,545
Allstate $3,551
Average $2,715
Usually, the only people with no credit history are either very young or are new to the U.S. Trying to determine how much you’ll pay for insurance without a credit history is difficult because companies treat this unusual situation differently.
If you don’t have a credit history, make sure to shop around for quotes. Since companies treat drivers without credit history differently, you might find rates with a lot of variation.
How does your location affect car insurance rates for drivers with bad credit?
While credit is an essential aspect of your car insurance rates, your location is another crucial factor. Check below for the average rates for in your state.
State Allstate Geico Nationwide Progressive State Farm Travelers Average
AK $139 $100 $67 $102
AL $111 $92 $99 $116 $111 $81 $114
AR $167 $93 $132 $135 $82 $114 $118
AZ $186 $67 $120 $87 $83 $108 $113
CA $166 $129 $148
CO $171 $97 $110 $124 $97 $123
CT $202 $64 $115 $137 $94 $86 $129
DC $248 $71 $177 $118 $114 $146
DE $213 $104 $148 $93 $119 $85 $182
FL $189 $92 $106 $157 $102 $135
GA $170 $63 $157 $118 $110 $148
HI $93
IA $84 $75 $78 $67 $95 $87
ID $132 $59 $85 $54 $59 $83
IL $181 $49 $96 $92 $66 $90 $96
IN $144 $65 $100 $71 $73 $71 $101
KS $164 $77 $95 $131 $84 $89 $121
KY $82 $190 $115 $101 $144 $134
LA $212 $145 $166 $128 $163
MA $112
MD $207 $139 $109 $124 $110 $138
ME $111 $38 $97 $60 $63 $88
MI $418 $102 $265 $157 $215 $189 $266
MN $165 $93 $89 $69 $144
MO $153 $93 $68 $101 $88 $111
MS $152 $74 $99 $124 $85 $91 $107
MT $159 $85 $91 $176 $73 $116
NC $175 $71 $114 $33 $79 $102 $94
ND $140 $62 $79 $114 $79 $143
NE $129 $95 $79 $98 $71 $113
NH $132 $52 $79 $65 $61 $99
NJ $162 $76 $96 $117 $140 $160
NM $163 $93 $99 $89 $71 $108
NV $171 $113 $116 $85 $106 $94 $123
NY $152 $80 $169 $99 $141 $180 $147
OH $124 $61 $117 $88 $72 $65 $89
OK $139 $113 $114 $94 $131
OR $158 $96 $114 $80 $77 $100 $111
PA $152 $70 $89 $153 $78 $78 $121
RI $194 $129 $196 $120 $78 $106 $152
SC $138 $82 $122 $108 $91 $119
SD $140 $59 $79 $108 $69 $121
TN $148 $81 $122 $95 $75 $91 $100
TX $207 $109 $159 $124 $92 $145
UT $120 $76 $96 $98 $106 $106
VA $106 $72 $88 $63 $65 $79
VT $147 $39 $80 $186 $90 $107
WA $118 $77 $72 $62 $72 $87
WI $127 $64 $233 $97 $60 $105
WV $167 $86 $107 $114 $82 $126
WY $160 $114 $85 $114
As you can see, there’s a lot of variation by state. This difference is due to various factors, including the minimum amount of insurance required by the state.
Insurance companies keep careful track of who makes claims by ZIP code. Some states see higher rates than others because of increased accidents, traffic infractions, and other claims.
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Why do car insurance companies look at credit scores?
Car insurance companies look at various factors when determining your rates to assess your risk. The higher the likelihood you’ll cost the company, the more you’ll pay for insurance.
While that reasoning makes sense for driving records, why do auto insurance companies look at credit scores?
Insurance companies carefully track claims data. For example, companies can look at who’s more likely to file a claim by demographic, explaining why men usually pay more for insurance than women. Unfortunately, claims data suggests that people with lower credit scores are more likely to file a claim.
Not only are people with lower credit scores more likely to file a claim, but companies tend to pay more for those claims than for other credit score groups.
Unless you get usage-based insurance, insurers won’t individualize your rates. Instead, you’re assigned a rate based on your demographics. So, for example, your insurance rates might increase even if you haven’t filed a claim because drivers in your area did.
How do you find affordable insurance with bad credit?
Finding affordable services with poor credit can feel like a never-ending battle. However, there are ways for you to find the most affordable bad credit auto insurance. Consider the following methods to find coverage:
- Take advantage of discounts. Most companies offer car insurance discounts to help customers save. Look at companies with discounts and cheap car insurance for bad credit, like Geico.
- Pick the right coverage. Depending on your car, you might be able to drop some coverage. Speak with an insurance representative if you need help deciding what to cut.
- Choose when to file a claim. Ensure the rate increase will be less than the repair bill. The average at-fault accident increases rates by almost $800 a year, so consider paying for minor repairs out of pocket.
- Raise your deductible. You can raise your deductible to lower monthly rates, but you’ll have to pay more out of pocket before insurance kicks in.
- Try usage-based insurance. Usage-based car insurance tracks your driving habits and mileage. It’s a solid alternative to standard insurance if your rates are high due to credit scores.
- Shop around. Even if you already have insurance, there’s no harm in looking at quotes. Comparing prices is the best way to ensure you have the best deal.
These tips are great ways to look for affordable auto insurance for bad credit immediately, but there's another way to lower your rates. It takes longer, but it’s worth the effort to improve your credit score when your work pays off.
Tips to Improve Your Credit Score
Improving your credit score is often tricky, especially if your budget is tight. However, improving your score will help you in a multitude of ways, only one of which is lowering your insurance rates.
If you need to improve your credit score, try these simple tips:
- Avoid new accounts. While opening a new credit card might be tempting, you should avoid new applications. Hard checks on your credit score will lower it.
- Pay off balances. Focus on as many discretionary funds as possible to pay existing credit card debt. Then, pay off your full balance monthly to reduce your credit utilization.
- Set up automatic payments. Late payments negatively impact your score. Most services offer an auto-pay option if you struggle to pay your bills on time.
- Monitor your score. Use credit monitoring to check your account and dispute errors as they arise. Not only can you keep your score clean this way, but you can also monitor for identity theft.
Building your credit score is often a long process, but the end result is worth it. As your score climbs, inform your insurance company so it can adjust your rates.
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Find the Best Car Insurance for Drivers with Bad Credit
A poor credit score is never a fun place to find yourself, but it’s not the end of the world. Your long-term goal should be to increase your score, and you can find affordable car insurance along the way. By looking for discounts, shopping at companies favorable to poor credit, and choosing the right coverage, you can find insurance within your budget no matter your score.
One of the most important steps in finding affordable bad credit car insurance is to shop around. Compare quotes with as many companies as possible to find the best insurance.
Frequently Asked Questions
Does getting an insurance quote impact your credit score?
No, getting a car insurance quote doesn’t affect your credit score. Most companies do a soft check when accessing your information, but even a hard check from an insurance provider usually doesn’t affect your score.
Can you be refused or denied insurance because of your credit score?
Unfortunately, a car insurance company can refuse coverage if your score is too low. However, some states disallow this practice, including California, Maryland, Massachusetts, Oregon, Hawaii, and Michigan.
What is no-credit-check insurance?
No-credit-check insurance is simply a policy you buy without a credit check. When you look for no-credit-check insurance, thoroughly compare companies since rates tend to be much higher.
Will my car insurance go down if my credit improves?
You’ll likely see lower rates when you improve your credit score enough to reach a higher group. You’ll probably see your rates drop when your policy renews since the company reviews your information at that time.
You don’t have to wait for renewal, however. If your hard work earns you a significant credit score increase, you could call an insurance representative to see if they can adjust your rates.
Can you negotiate lower rates with your car insurance company?
Unfortunately, you can’t negotiate your rates with your company. No matter what efforts you’re taking to improve your rates, car insurance companies won’t change your rates.
However, you can alert your company after you’ve improved your rates. Some companies will reevaluate your rates upon the improvement of your credit score, while others will lower your rated when your policy renewes.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
|
Written by
Rachel Bodine |
|
Reviewed by
Daniel Walker
|