How can I find affordable auto insurance with bad credit?

Larger auto insurance companies place more emphasis on your credit rating when determining your risk level. High-risk drivers pay $137.75/mo more on average for coverage.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 15, 2021

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Things to Remember...

  • There are a variety of factors that impact auto insurance, including credit score
  • Having a bad credit score could mean you are categorized as a high-risk driver with higher rates
  • Finding affordable auto insurance with bad credit is possible with research and comparing several companies

Bad credit is one of those things that can have ripple effects into several areas in a person’s life.

One of these areas is finding auto insurance coverage that is affordable. While it may not carry as much weight as a driver’s driving record, credit history can affect a person’s eligibility for auto insurance coverage.

Finding the most affordable auto insurance plan with bad credit requires drivers to consider their coverage needs and shop around for companies that offer the best rates.

There are also credit-building steps a person can take to improve their eligibility status for insurance coverage.

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Types of Auto Coverage

Private auto insurance companies use a system with tier levels to determine different coverage rates for eligible drivers.

This system is based on a driver’s risk profile in terms of the likelihood a person will file claims in the future.

In general, the main levels used for qualifying drivers include:

  • Preferred coverage
  • Standard coverage
  • Non-standard coverage

Drivers with bad credit may only be able to qualify for non-standard coverage rates, which places them in a higher risk category than those who qualify for standard and preferred coverage.

Someone with bad credit usually has to pay more for auto insurance coverage than someone without bad credit.

Many auto insurers will still offer insurance coverage when bad credit is an issue, though some may deny an application based on credit history alone.

Granted, other factors do affect a person’s overall risk profile, and insurers also consider a person’s driving record, the type of car used and the frequency of car usage.

Ultimately, a poor credit rating can result in drivers paying as much as two to three times more in insurance premiums than standard and preferred customers, but an online comparison and research can still help you find affordable rates.

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Credit Score Effects

Drivers with a credit of 620 or lower may find themselves up against unusually high auto insurance coverage rates.

For auto insurers, the 620 mark represents a cutoff point that indicates drivers have a number of non-payments or late payments on their credit record.

Auto insurers may view a financially responsible driver as someone who’s less likely to file a claim and more likely to pay insurance premiums in a timely manner.

On the hand, someone who is more likely to file an insurance claim increases the amount of risk an insurance company takes on when issuing a policy.

As drivers with poor credit tend to lack the ability to get credit, they’re also more likely to have to file a claim rather than use their own resources to cover a damage or accident expense.

Differences Between Auto Insurers

In general, the auto insurance marketplace is competitive so finding affordable insurance coverage with a bad credit record just takes a little extra research.

The larger, more well-known auto insurers may place more emphasis on a person’s credit history than the smaller companies.

In many cases, an insurance company will consider a person’s entire risk profile in terms of driving record, job stability, and the number of claims filed in the past.

And while a person may still end up paying higher coverage rates, these rates may not be as high as those offered by a company that places a heavy emphasis on credit history.

As drivers with bad credit may fall into a high-risk category, there are auto insurance companies who specialize in working with people who fall in the high-risk category.

Drivers can find companies offering affordable rates by doing company comparisons online.

Finding a company that meets a person’s insurance needs may take a little digging, it can pay off substantially in reduced insurance premium costs over the long haul.

Lowering Insurance Costs

As risk factors dictate an insurer’s likelihood of approving or denying an application, drivers can reduce their overall risk profile by ensuring other aspects of their profile fall within a low to no risk category.

Many auto insurance companies offer discount programs that offer reduced coverage rates under certain conditions.

When shopping for affordable coverage rates, drivers with credit problems may be able to find companies offering discount rates for people who have a good driving record.

In effect, the risks tend to balance out for someone with bad credit who has a good driving record so an auto insurer is more likely to offer coverage at an affordable rate.

The type of car a person drives can also trigger high insurance coverage rates, as a brand new car means significantly higher rates than an older model. 

A person’s job history can also help improve a risk profile in the eyes of an insurer in cases where a steady long-term employment history has generated a regular paycheck.

Many insurers will consider this as proof that a person can keep up with premium payments, which helps reduce the overall risk involved with insuring a driver.

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