How to Get Auto Insurance With Bad Credit
Having bad credit can make auto insurance more expensive—but it doesn’t mean you can’t get covered or find a fair rate. With the right strategy, you can limit the impact of your credit score and still secure strong protection.
Quick Take
Watch: How to Get Car Insurance With Bad Credit
Want to Compare Auto Insurance the Smart Way?
Most drivers overpay for auto insurance simply because they compare quotes the wrong way. The Before You Buy: Auto Insurance Rate Comparison Guide shows you the exact step‑by‑step method smart shoppers use to compare coverage, spot hidden differences, avoid misleading “cheap” quotes, and find the best value fast. If you want lower rates without cutting coverage, this guide is the proven system that makes it easy.
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How credit affects auto insurance
Most insurers use a “credit‑based insurance score,” which is different from your regular credit score but influenced by similar factors. They use it to predict how likely a customer is to file a claim.
Insurers may consider:
- Payment history.
- Outstanding debt.
- Length of credit history.
- Types of credit used.
- Recent credit activity.
Bad credit doesn’t automatically make you high‑risk—but insurers often charge more until you prove stability over time.
Step 1: Know your state’s rules
Some states limit or ban the use of credit in auto insurance pricing. If you live in one of these states, your credit score may not affect your rate at all.
States with restrictions include:
- California
- Hawaii
- Massachusetts
In most other states, credit is allowed—but how heavily it’s weighted varies by insurer.
Step 2: Compare multiple insurers—credit impact varies widely
Some insurers penalize bad credit heavily, while others weigh it lightly. The only way to know who treats you fairly is to compare several companies.
Include:
- National insurers.
- Regional carriers.
- Online/direct insurers.
- Independent agents who can quote multiple companies at once.
Step 3: Fix rating details that matter more than credit
Even with bad credit, you can lower your rate by correcting other rating factors that insurers weigh heavily.
Check for:
- Accurate annual mileage.
- Correct garaging address.
- Removing old or inactive drivers.
- Removing vehicles you no longer own.
Step 4: Use discounts to offset the credit penalty
Discounts can significantly reduce the impact of bad credit—especially when stacked.
Ask about:
- Bundling home or renters insurance.
- Multi‑vehicle discounts.
- Autopay or paperless billing.
- Low‑mileage or telematics programs.
- Defensive driving courses (in some states).
Step 5: Choose the right policy structure
Your coverage choices can help control your premium even when credit is working against you.
Adjust deductibles
Raising your comprehensive and collision deductibles can lower your premium without reducing your liability limits.
Consider dropping optional extras
If your car is older, you may not need collision or certain add‑ons. Just avoid cutting essential protections like liability or uninsured motorist coverage.
Ask about usage‑based insurance
If you drive safely, telematics programs can help you earn discounts that outweigh the credit penalty.
Step 6: Avoid choices that make bad credit worse
Once you’re insured, avoid behaviors that could compound the impact of your credit score.
- Don’t let your policy lapse.
- Don’t miss payments—set up autopay if needed.
- Don’t switch insurers too frequently.
- Don’t take on deductibles you can’t afford.
Quick comparison: Bad credit vs. other rating factors
| Factor | Impact on Rate | How to Improve |
|---|---|---|
| Bad credit | Moderate to high | Use discounts, telematics, and correct rating details |
| At‑fault accident | High | Safe driving, telematics |
| Lapse in coverage | High | Get insured ASAP, avoid future lapses |
| High‑risk vehicle | Moderate | Choose safer, cheaper‑to‑insure models |
Common mistakes when getting insurance with bad credit
⚠️ Mistake #1: Accepting the first quote without comparing alternatives.
⚠️ Mistake #2: Dropping essential coverages to chase a lower price.
⚠️ Mistake #3: Letting your policy lapse, which makes rates even worse.
⚠️ Mistake #4: Ignoring discounts that could offset the credit penalty.
FAQ: Getting auto insurance with bad credit
Can I still get affordable insurance with bad credit?
Yes. Rates may be higher at first, but comparing multiple insurers and using discounts can significantly reduce your cost.
Does improving my credit lower my insurance rate?
Often yes, but the impact varies by insurer. Improvements may take one or two renewal cycles to show up.
Do all insurers check credit?
No. Some weigh it lightly, and a few don’t use it at all—especially in states that restrict credit scoring.
Will switching insurers help?
Often. Different insurers treat credit very differently, so shopping around is one of the most effective strategies.
Final thoughts
Bad credit doesn’t have to trap you in high auto insurance rates forever. By comparing multiple insurers, correcting rating details, using discounts, and choosing the right policy structure, you can get strong coverage at a fair price—and improve your rate over time as your credit rebounds.
Boss Block: Official Auto Insurance, Consumer Protection & Rate‑Setting Authorities
Trusted government, regulatory, and nonprofit organizations providing authoritative guidance on auto insurance pricing, renewal rules, consumer rights, and state‑level oversight.
Auto Insurance Consumer Guides
Insurance Information Institute (III)
How to Save on Auto Insurance
Consumer Financial Protection Bureau (CFPB)
Insurance Consumer Tools & Rights
USA.gov
Auto Insurance Basics & Federal Resources
FTC Auto Insurance Consumer Protection
State Insurance Commissioners
Find Your State Insurance Department
National Highway Traffic Safety Administration (NHTSA)
Driving Safety Resources
FINRA
Financial Education & Consumer Protection
