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Best Cheap Car Insurance for Bad Credit
Best Cheap Car Insurance for Bad Credit
Find Cheap Auto Insurance Quotes in Your Area
Geico has the cheapest auto insurance quotes for drivers with bad credit, at an average of $212 per month.
Car insurance quotes are 72% more expensive for drivers with poor credit than drivers with good credit. Insurers tend to charge higher rates for drivers with lower credit scores because they correlate bad credit with filing more insurance claims.
Cheapest car insurance for bad credit: Geico
Geico offers the cheapest auto insurance for drivers with bad credit. The average annual cost of $212 per month for full coverage is $5 per month cheaper than Farm Bureau.
USAA offers the cheapest rates overall for drivers with lower credit scores, but the company's coverage is only available to military members, veterans and some of their family members.
Find Cheap Auto Insurance Quotes
Across the states that allow credit rating to factor into car insurance rates, poor credit raises prices by 72% per year. By comparison, Geico only raises its rates by 51%, while Nationwide raises rates by 44%.
Cheapest monthly car insurance quotes
Company | Poor credit rate | Good credit rate |
|---|---|---|
| Geico | $212 | $140 |
| Farm Bureau | $217 | $134 |
| Erie | $232 | $101 |
| American Family | $233 | $140 |
| Nationwide | $236 | $164 |
Best car insurance companies for poor credit
Geico is among the largest car insurance companies in the country and offers some of the best rates for drivers with poor credit. Drivers with poor credit pay an average of $212 per month with Geico. In 17 states, it has the best rates of any non-USAA insurer. The company only raises rates 51% for drivers with bad credit compared to policyholders with good credit.
Farm Bureau is an organization with a group in most states,, and most offer car insurance at a discounted rate to members. A full-coverage policy for a driver with poor credit is $217 per month from Farm Bureau. Policyholders have to pay an annual membership fee, but it's usually less than $100, and you don't have to be a farmer to join.
USAA is the cheapest company overall for drivers with bad credit. Full-coverage auto insurance costs $163 per month for an annual policy, on average, which is the lowest rate by far. USAA is in every state and Washington, D.C. However, policies are only available to a limited group: military members, veterans and some of their family members.
Best bad credit car insurance companies by state
Best auto insurance for good credit: State Farm
If you can improve your credit score from poor to good, you can expect 42% cheaper car insurance quotes.
State Farm offers the best rate for drivers with good credit, with an annual rate — $99 per month — that is a bit cheaper than any other large company besides USAA. Erie has the second-lowest annual rate, at $101 per month.
Farm Bureau, Auto-Owners, Geico and American Family also offer affordable quotes.
Company | Mo. Cost | Diff. from poor credit |
|---|---|---|
| State Farm | $99 | 59% |
| Erie | $101 | 56% |
| Farm Bureau Insurance | $134 | 38% |
| Geico | $140 | 34% |
| American Family | $140 | 40% |
No-credit-check insurance companies
A few states, including California, Hawaii, Massachusetts and Michigan, do not allow insurance companies to use credit scores as a factor in setting car insurance rates.
Few insurance companies provide a car insurance policy without a soft credit check. Though they're rare, you might be able to find a local no-check car insurance company .
A few examples are Dillo in Texas, Cure Auto Insurance in New Jersey and Pennsylvania. But they are exceptions, as 95% of auto insurance companies factor in credit history to calculate your quotes, according to FICO.
Although some insurers might not check your credit before providing you with a quote, they will almost always check your credit before you sign up for your policy.
Why is car insurance more expensive for drivers with bad credit?
A driver's credit score does not indicate a driver is more risky on the road, but that they are more expensive to insure.
Insurance companies charge higher rates to drivers with low credit scores because there is a correlation between bad credit and an increased likelihood of filing a claim, according to a Federal Trade Commission report.
Drivers who file an insurance claim cost insurance companies money when they have to pay out a claim, even for comprehensive or collision insurance claims. And because insurers increase rates for customers they expect will have higher insurance payouts, drivers with poor credit end up with higher rates than those with excellent credit.
Drivers with no credit history are usually treated similarly to drivers with bad credit scores and generally have higher auto insurance rates.
How to get cheaper car insurance rates if you have bad credit
The best way to lower your insurance rates if you have bad credit is to work on improving your credit score, though it's not an easy or fast process.
Make on-time payments: Making your credit payments on time is one of the best ways to improve your credit, as payment history is the biggest factor in your credit history. It accounts for 35% of your FICO Score. Paying your insurance bills on time will not help your credit score, but missing payments could hurt both your score and your rate.
Don't max out your credit cards: The ratio of the credit you use compared to the credit that is available to you is known as your credit utilization ratio. Maintaining a ratio below 30% is a great way to improve your credit rating, as credit utilization accounts for 30% of your credit score. For example, if you have a credit card with $1,000 of available credit, you want to maintain a balance of no more than $300.
Beyond improving your credit, you can take a few more traditional steps to potentially lower your insurance rates.
- Take advantage of all discounts, such as good driver discounts, good student discounts or multiple policy discounts.
- Increase your deductibles. Increasing the deductible on your collision or comprehensive will lower your premiums; just be sure you are able to cover the deductible in case of an accident or damage.
- Consider Potential Premium Increases Before Filing a Claim. A clean claims history can help keep rates reasonable. For minor issues you can afford to pay for out of pocket, it may be better to handle the cost yourself.
- Shop around and get quotes from multiple car insurance companies to get the best deal.
Frequently asked questions
Can I get car insurance with bad credit?
Yes, but it will likely be more expensive. Poor credit raises rates by an average of 72%.
Why does bad credit raise car insurance rates?
Drivers with bad credit tend to file more claims than drivers with better credit, according to a Federal Trade Commission report. Because car insurance companies lose money when they have to pay out claims, they charge higher rates to drivers they predict will make more claims.
Can I get insurance with no credit check?
You can, but only in some instances. Relatively few companies offer insurance without a credit check. Most cater to high-risk drivers, so their rates are often high anyway.
How can I get cheaper car insurance quotes if I have bad credit?
The best path is working to improve your credit score by paying your bills on time. You can also look for discounts, shop around and scale back your coverage to reduce your insurance costs.
Methodology
Data was collected from the largest insurance companies in 45 states where credit is a factor for deciding car insurance quotes. Rates are for a 30-year-old man with a 2015 Honda Civic EX and a full-coverage policy.
This analysis used insurance rate data from publicly sourced insurer filings using Quadrant Information Services. These quotes should be used for comparative purposes only, as your rates may differ.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.