Finding Car Insurance When You Have A Bad Credit Score
Does My Credit Score Affect My Car Insurance?
In most states, insurers use credit-based insurance scores to help determine if they’ll insure a driver and at what price. Because insurance companies use pieces of an individual’s credit information to create a credit-based insurance score, there is a connection between credit scores and car insurance costs. Generally speaking, a lower credit score leads to higher insurance costs, and a higher credit score leads to lower car insurance costs.
However, there are some states that outlaw insurers from using credit for underwriting or rating, while others have restrictions on when and how insurers can use credit information. Every state has its own laws, so be sure to see what is and isn’t allowed in your state.
What Options Do I Have For Car Insurance If I Have Bad Credit?
Some insurers are unwilling to work with individuals who have bad credit, but others are more forgiving. Direct Auto specializes in helping drivers secure affordable car insurance coverage, regardless of their driving, credit or insurance history.
So, even with a poor credit history, there are still options if you’re searching for low car insurance rates. A friendly, knowledgeable agent (like the ones at Direct Auto) can help:
- Find discounts available to you.
- Determine the coverage types and limits that are right for you.
- You find a payment schedule that works for your budget.
What If I Have No Credit?
Because auto insurers in most states use credit when setting rates, finding affordable car insurance with no credit history can be a challenge. MarketWatch notes that, generally speaking, insurers won’t decline drivers with no credit history, but they might charge higher rates.
Even so, there are still options available to you if you don’t have credit. Just like drivers with poor credit, you can work with a knowledgeable agent from an understanding insurer to find discounts, only pay for the coverage you really need and get a payment schedule that aligns with your needs. Direct Auto is more than willing to work with drivers with no credit history.
Additionally, because some individuals without credit might also be young drivers who are new to the road, they have the chance to build safe-driving habits and a good credit score that can save them money over time.
How Can Drivers With Poor Credit Save On Auto Insurance?
When shopping for car insurance with poor credit, discounts are one of the best ways to save money. For example, at Direct Auto, drivers can save up to 25%*! Here are just a few of the ways you could save on a policy with Direct.
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Save up to 10% if you join the DynamicDrive program. Drive safely to save even more. |
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Save up to 9% if you set up automatic payments, pay for your policy in full or go paperless. |
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Save up to 5% if you include an active qualifying product with your auto policy. |
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Save up to 25% if more than one vehicle is covered under your policy. |
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Save up to 10% if you’re a full-time student with good grades. |
In other words, even if you have bad credit, you can save by bundling coverages and services, driving safely or even by the way you pay. Or, if you’re young driver with no credit history yet, you could save money if you’re in school and making good grades. And those are just a handful of the many discounts available from Direct Auto.
Bad Credit Car Insurance Frequently Asked Questions?
Do auto insurance providers pull a hard inquiry or a soft inquiry?
Car insurance companies do not perform hard credit checks, according to MarketWatch. In states where credit checks are allowed, insurers perform a soft pull of a driver’s credit.
Can paying my auto insurance on time improve my credit?
There isn’t a direct relation between on-time car insurance payments and a boost in credit score, according to Chase. However, Chase notes that failure to pay your insurance bill could send you to debt collection, and debt collection reports can negatively affect your credit score.
How much more will I pay for auto insurance if I have bad credit?
Because credit-based insurance scores are just one piece of information auto insurer’s use to determine rates, it’s hard to say exactly how much you’ll pay for auto insurance with a poor credit score. However, Bankrate notes that drivers with poor credit typically pay substantially more each year for full coverage than drivers who fall in other credit categories.
What credit score is considered poor?
Credit score categorization can vary depending on the selected scoring model and who is pulling the credit score. Experian says that a “poor” FICO® Score is 579 or lower, while scores of 600 or lower fall into VantageScore’s “poor” categories.