Can You Get Car Insurance With Bad Credit?

If you have bad credit, you can still get car insurance, but you'll usually pay higher premiums in states where insurers can use credit-based insurance scores when setting rates. One of the best ways to lower your costs is to compare quotes from multiple insurers, since every company weighs credit and other risk factors differently.

Bad credit doesn't prevent you from buying auto insurance, and it doesn't mean every insurer will charge the same premium. 

Many insurers use a credit-based insurance score rather than a traditional consumer credit score when pricing auto insurance. A credit-based insurance score analyzes information from your credit history to estimate future insurance risk.¹

Credit is only one factor used to determine your premium. Insurers also consider your driving record, claims history, age, location, vehicle, annual mileage, and coverage selections.²

Drivers with poor credit often pay substantially more than drivers with excellent credit for similar coverage. While insurers don't view poor credit as proof that someone is a bad driver, they consider it one of several indicators used to estimate future claims costs.³

Luva's research found that more than one in four insurance shoppers with poor credit have had coverage for less than a year, about three times the rate of shoppers with excellent credit.⁴

No. Many insurers use credit-based insurance scores in states where the practice is legally permitted. Some companies place greater emphasis on driving history or claims history, while others rely more heavily on insurance scores.

Carriers weigh credit differently, and some lean on it less than others. That's why shopping around is especially important if you have poor credit. Comparing several insurers on Luva can surface the ones whose pricing works in your favor.

Several states prohibit or substantially restrict the use of credit information in personal auto insurance pricing, including:

• California

• Hawaii

• Massachusetts

• Michigan

Some states may also restrict when insurers may obtain or use credit information, and regulations vary depending on where you live. Checking your state's insurance department can help you understand the rules that apply in your area.⁵

There isn't one insurer that's always the least expensive for drivers with poor credit. Your premium depends on factors such as your location, driving history, vehicle, coverage limits, deductible, and how each insurer weighs credit information.

Here's a look at some of the lowest average rates we found for drivers with poor credit:

Even if you've stayed with the same insurer for years, another company may offer significantly lower rates for similar coverage. Comparing quotes every renewal helps ensure you're receiving competitive pricing.

Although improving your credit takes time, there are several ways to reduce your premium immediately.

• Compare quotes from several insurers.

• Bundle auto insurance with homeowners or renters insurance.

• Ask about safe-driver, telematics, low-mileage, and defensive-driving discounts.

• Increase your deductible if it fits your budget.

• Review optional coverages on older vehicles.

Luva's research found that approximately 26% of insurance shoppers in their late 30s and early 40s have poor credit, the highest percentage among measured age groups.⁴ That percentage steadily declines with age, suggesting many shoppers improve their financial standing over time.

Improving your credit score won't reduce your insurance premium overnight, but it can help you qualify for lower rates over time. Many insurers review policies at renewal, and you'll often see the greatest savings when you compare quotes after your credit improves.

To strengthen your credit:

• Pay bills on time.

• Keep credit card balances low.

• Limit new credit applications.

• Review your credit reports for errors and dispute inaccuracies.

• Keep older accounts open when possible.

As your credit improves, re-compare on Luva to see whether another carrier offers a better rate.

Credit is only one potential rating factor. Other important rating factors include:

Since every insurer weighs these factors differently, comparing quotes remains one of the best ways to find affordable coverage.

No. Requesting a car insurance quote generally results in a soft credit inquiry, which doesn't affect your credit score.⁶

You can compare quotes from several insurers without worrying that shopping around will lower your credit rating.

Finding affordable coverage with poor credit is easier when you follow a simple process.

1. Decide how much coverage you need.

2. Gather your driver's license, vehicle information, and current policy details.

3. Compare quotes from several insurers.

4. Ask about available discounts, including bundling, telematics, safe-driver, and low-mileage programs.

5. Choose a deductible that fits your budget.

6. Review your policy each renewal and shop again if your credit improves.