Marissa Hayes is a technical editor and contributing writer. She holds a Bachelor’s Degree in history, and she was the editor of the literary magazine, The Bluestone Review.

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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. 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

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Reviewed by Daniel Walker
Licensed Car Insurance Agent

UPDATED: Jul 19, 2021

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You probably know that bad credit can affect your ability to get a mortgage loan, car loan, or other types of credit.  But you may not realize that your credit history can also affect your ability to obtain car insurance, as well as the amount of premium you’ll pay.

Most companies offer auto insurance for people with bad credit. However, some may not so our goal on this page is to help educate you on what you can do to find cheap coverage even if you do have poor credit.  This might require you taking steps to improve your credit, or could be making changes to your current risk profile.

How is your auto insurance rate determined?

Your auto insurer takes into account a variety of factors when determining your rate. These include your age, gender, driving record (history), where you live, and the type of vehicle you drive. In addition, many companies also look at your credit score, although the practice is banned in three states: California, Hawaii, and Massachusetts.

Using these factors, an insurer will determine if you qualify for preferred coverage (for their lowest-risk customers), standard coverage, or high risk auto insurance coverage (non-standard).  If your credit score, combined with your other determining factors, pushes you into a lower range, you’ll pay more, especially once you reach the level of non-standard coverage. In the worst-case scenario, an insurance company could decline to offer you any type of policy.

What does your credit score show?

Your credit score offers a snapshot of your financial life, and it changes over time. It reflects the amount of credit that you have available to you, the outstanding debt you have, how often you pay your bills on time, and whether you’ve filed for bankruptcy or recently applied for new credit. It doesn’t take into account the amount of money you make or have saved.

Why is this information important to auto insurers?

This information is used to compile a score that is supposed to reflect your credit-worthiness. But while a mortgage lender or company that’s financing your car wants to know if you’ll be able to pay back your debt to them, an auto insurance company primarily wants to determine how likely you are to get into repeated accidents and file claims that will cost the company large amounts of money over time.

If an insurance company thinks you’re likely to get into more accidents, it needs to make sure that the premiums you’re charged will exceed the claims you make. Otherwise, it’s losing money by having you as a customer.

Although the relationship may seem tenuous, there have been several studies that support the idea that credit scores can help predict how many accidents you’ll be involved in. For example, the Federal Trade Commission conducted a study that found credit scores to be a good predictor of risk.People with good credit scores are probably more likely to pay their premiums on time, but the other reasons behind their ability to predict your claims are less clear. It could be that people with better credit scores are more financially responsible, and this increased level of responsibility extends into other areas of their lives.

They may drive more cautiously and make sure their car is locked and stored properly. They may also choose to pay for small incidents out of pocket rather than filing a claim with their insurance company. Whatever the reason, the relationship is often there. It doesn’t mean it’s necessarily true in your individual case, but insurance companies look at the overall numbers to make decisions.

Credit scores usually range between 300 and 850. Generally, a score of 620 or lower may lead to higher insurance rates.

How do you check your credit history and score?

You’re entitled to one free copy of your credit history per year. The Federal Trade Commission recommends using, which is operated by the three nationwide credit reporting companies. Each may have slightly different information, so you may want to get a copy of each to find out exactly where you stand.

You’ll be able to see if there are errors on your report – which does happen sometimes. Perhaps you paid a long-standing medical bill, but it’s still showing up as outstanding debt on your credit history. Or maybe you share your name with your father, and some of his debts have been inaccurately attributed to your credit report. Either way, you can write to the credit reporting company to have the error corrected.

The free credit report will give you an overview of your credit, but it won’t give you your exact score. For that, you may have to go to the three credit reporting companies – Equifax, Experian, and TransUnion and pay to get your score.

In addition, some credit card companies, such as Discover, will include your credit score for free each time you receive a bill from them. You can also get a copy of your score for free when you obtain a mortgage or are denied a loan.

Insurantly suggests you make sure and understand the various types of car insurance coverage. You might be paying more than what you need. But knowledge is power so we suggest the following pages to dig further into your options if you have bad credit.

Auto insurance Full Coverage

On this page we provide answers to over 20 of the most common questions regarding full coverage car insurance.

Car insurance for high risk drivers

On this page Insurantly goes in depth about getting auto insurance if you are considered high risk by the insurance company. If you have a lower credit score it might be beneficial to read this page and understand how to obtain more affordable coverage.
Car insurance and auto accidents

Insurance companies calculate that if you have bad credit you may get into above average car accidents and therefore file more claims. On this page we answers dozens of questions regarding auto accident effects are rates.

How can you raise your score if it’s too low?

After you’re corrected any errors, you can help raise your credit score with the following steps:
Pay your bills on time

  • Paying your bills on time, every time, will have a big impact on your score. Set up an automatic draft from your bank account if you have trouble remembering to pay regular bills, but make sure you have the funds in your account to pay. For other bills, like ones owed to doctors or hospitals, you can often work out a payment plan to avoid paying late and eventually having the bill turned over to a debt collector.

Don’t apply for unnecessary credit

  • Don’t be tempted by the store-branded credit cards used to entice you at the register. Too many inquiries made on your credit history can hurt your score, and if you have more cards, you may be tempted to spend more than you ordinarily would. In addition, if you have too much available credit, it could hurt your credit score.

Don’t spend up to your limit

  • You may have a high spending limit on your cards, but that doesn’t mean you should use it. Charge only what you can afford to pay off that month. Generally, you should try to use 10 percent or less of the credit you have available to you.

Establish a credit history while you’re young

  • If you’re young, you may not have had the time necessary to build up much of a credit history. Unfortunately, this is also a time at which your auto insurance rates are also likely to be higher. Becoming an authorized user on your parents’ credit card accounts can help give your credit history a jump start.Alternatively, you can open a secured credit card, which lets you deposit money into an account that will be used as collateral against the amount you borrow.

How can you lower your insurance rates even if you have a low credit score?

You can also have mitigate the effect a low credit score has by improving other factors that influence your auto insurance rate.
These can include the following:
The type of car you drive

  • An older car costs less to insure, simply because it’s worth less. In addition, cars with advanced safety features and good crash test ratings can be cheaper to insure, while sports cars are usually more expensive.

Your job history

  • Having an established career and stable job history can make your financial history look more secure to an insurer.

What else should you do to lower your rates?

Notify your insurance company of positive changes

  • If you’ve improved your credit score over time, notify your insurance agent and let him or her know. Make sure to first find out how many times they’ll recheck your score and adjust your rate. Some companies will recheck your credit score only once, so if this is the case, wait until you’ve made substantial improvements.

Shop around

  • Finally, make sure to shop around to ensure that you get the level of coverage you need at the best price. Insurers vary in the amount of weight they put on your credit score or other factors, so it pays to shop around. Even after you obtain insurance, compare rates periodically to make sure that you’re still getting a good deal.

Start with Insurantly. Compare car insurance without the hassle now.