Bad Credit Auto Insurance
Bad credit auto insurance is more expensive on average. Car insurance companies see people with bad credit scores as a higher risk of filing claims, which means bad credit auto insurance rates are much higher. You could pay as little as $308/mo, depending on the company. Compare rates and shop around to secure cheap auto insurance despite having bad credit.
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Written by
Sara Routhier
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Reviewed by
Cynthia Lanctot
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UPDATED: Jan 22, 2021
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- Auto insurance for people with bad credit is more expensive than average.
- Liability-only coverage is the cheapest option if you have bad credit.
- Other factors that determine auto insurance can lower your monthly rates.
Bad credit auto insurance can be expensive for policyholders. It may be difficult to get cheap auto insurance coverages if you have bad credit, but it’s not impossible.
Our short auto insurance guide will explain how you can find bad credit auto insurance quotes, what factors can lower your bad credit auto insurance rates, and how you can save money even if you have bad credit.
If you want to compare auto insurance quotes for bad credit, enter your ZIP code in the free comparison tool above to compare multiple companies in your local area.
Does bad credit affect auto insurance?
The short answer is yes.
But why do auto insurance companies charge more for bad credit scores? According to Experian, auto insurance companies associate bad credit with an increased chance to file a claim. To offset potential costs to them, car insurance companies issue higher than average car insurance rates.
What’s a bad credit score?
Bad credit scores are often referred to as poor credit scores. Both credit ratings aren’t good for your credit report, but the terms are used interchangeably.
To identify a bad credit score, we’ve provided a table that summarizes credit scores into ratings. Let’s examine them below.
| Credit Ratings | Credit Scores |
|---|---|
| Excellent / Very Good | 700 to 850 |
| Good | 680 to 699 |
| Average / OK | 620 to 679 |
| Low | 580 to 619 |
| Poor | 500 to 579 |
| Bad | 300 to 499 |
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Compared to the poor credit score, bad credit has the lowest credit rating and credit score. Auto insurance providers could deny you coverage, but you should try. You may be able to buy bad credit auto insurance.
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What companies have the cheapest bad credit auto insurance?
Before you buy bad credit car insurance, you should compare rates from different companies. To get you started, we researched the top ten companies in the United States and found auto insurance rates based on bad credit.
| Companies | Average Monthly Rates with Bad Credit | Average Annual Rates with Bad Credit |
|---|---|---|
| USAA | $308 | $3,691 |
| Nationwide | $340 | $4,083 |
| GEICO | $355 | $4,260 |
| American Family | $372 | $4,468 |
| Progressive | $395 | $4,738 |
| Farmers | $405 | $4,864 |
| State Farm | $413 | $4,951 |
| Travelers | $430 | $5,160 |
| Allstate | $541 | $6,491 |
| Liberty Mutual | $734 | $8,802 |
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USAA happens to be the cheapest company for policyholders with bad credit. However, USAA auto insurance is only available to military and veterans and their immediate families. For the general public, the cheapest companies for bad credit auto insurance are American Family, GEICO, and Nationwide.
What companies have the cheapest fair credit auto insurance?
Car insurance shoppers with fair credit have a better chance at cheaper car insurance rates. Let’s look at the same ten companies and see how fair credit affects monthly and annual auto insurance rates.
| Companies | Average Monthly Rates with Fair Credit | Average Annual Rates with Fair Credit |
|---|---|---|
| USAA | $185 | $2,220 |
| State Farm | $238 | $2,853 |
| GEICO | $249 | $2,987 |
| American Family | $264 | $3,170 |
| Nationwide | $271 | $3,255 |
| Farmers | $325 | $3,899 |
| Progressive | $330 | $3,956 |
| Travelers | $362 | $4,344 |
| Allstate | $382 | $4,581 |
| Liberty Mutual | $467 | $5,604 |
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Once again, USAA is the cheapest company. Following USAA is State Farm, GEICO, and American Family.
What’s the cheapest auto insurance coverage if you have bad credit?
The monthly and annual rates presented in the data above reflects full coverage car insurance rates. If you’re looking for the cheapest auto insurance option, liability-only auto insurance is the best way to go. On average, liability coverage is about 45 percent lower than full coverage.
Factors that Lower Auto Insurance Rates
Even with bad or poor credit, there’s a way to lower your premiums. One of the methods is through the quote process. As you go through personal information with an auto insurance company, there will be specific factors that affect your policy. These factors include:
- Age – By 25, you can receive cheaper auto insurance rates.
- Driving Record – One of the most significant factors that can reduce your rates by at least 30 percent.
- Deductible – High deductible has a small impact on car insurance rates, but you can still save.
- Education – Like credit scores, car insurance data suggest people with higher education levels file claims less.
- Location – Where you live can determine auto insurance rates.
Car insurance companies in California, Hawaii, and Massachusetts don’t use credit scores to determine car insurance rates. Also, Root Insurance – an online car insurance company – won’t determine rates based on credit score because it specifically uses usage-based insurance.
Four Ways You Can Lower Auto Insurance Rates
If you fall into a factor that doesn’t favor cheap auto insurance, there’s still a way to lower your auto insurance rates. Here are four ways you can reduce bad credit car insurance rates.
- Discounts – When you shop around, ask the auto insurance company about discounts.
- Comparison Shopping – Getting a quote doesn’t mean you have to buy car insurance – shop around until you find the best rates.
- Maintain a Clean Driving Record – The better your driving record, the cheaper your car insurance rates will be.
- Improve Your Credit Score – Pay any debts you have to improve your credit or start building your credit by other means.
Don’t give up. Keep searching for ways to secure affordable bad credit auto insurance. If you happen to run into a company that denies you coverage, look for no credit check auto insurance.
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Bad Credit Auto Insurance: The Bottom Line
You might run into a few detours if you’re searching for very cheap car insurance with no deposit, especially if you have bad credit. No down payment auto insurance is more beneficial to policyholders with good to excellent credit. However, it doesn’t mean you can’t save money on car insurance.
Start saving by entering your ZIP code in the free comparison tool below and compare bad credit auto insurance rates from multiple companies.