In most States in the US, many drivers with poor reputations will struggle to find car insurance for bad credit. Auto insurance companies link lower credit with a higher chance that you will file an insurance claim. In anticipation of these claims, they generally charge much higher rates for drivers with bad credit.
Yet, that doesn’t mean you can’t find the best insurance for your situation. Thus, we will compile some information to help you find the right car insurance for those with poor credit.
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Why are Credit Scores Important for Car Insurance?
Auto insurance companies often rely on credit-based insurance scores when determining your car insurance price. Furthermore, a credit-based insurance score provides varying weights to different factors compared to a regular credit score, like the FICO score.
Insurers often use a Federal Trade Commission study that draws a connection between credit and risk in which the driver will file an auto insurance claim. Besides, insurers who use credit-based insurance scores state that the better the driver’s score, the lower the possibility of filing a claim.
So, it indicates that drivers will get better car insurance rates if they have good credit. In contrast, if you had poor credit, you should pay higher auto insurance quotes due to the higher risk. Consequently, it’s pretty hard to find the right car insurance for bad credit.
What is the Cheapest Car Insurance for Bad Credit?
Based on your state, most car insurance providers consider your credit score when setting the price of your policy. But, each company weighs its interests in a different way. Acquiring price quotes to compare rates, discounts, coverage options, and policy features is recommended for most drivers.
However, if your credit score is low, shopping around may be more important. According to our investigation, Nationwide, Geico, Amica, Travelers, and Mercury are the cheapest companies for drivers with poor credit.
Besides low average rates, these cheap car insurance companies rank well for customer satisfaction and have a high financial strength rating from AM Best. Now, let’s get to know the best three car insurance companies for poor credit:
1. Geico
Costing around $202 monthly, Geico offers the cheapest average car insurance for bad credit. This company has a high cost of car insurance for people who have tickets and nice insurance rates for elderly drivers and young drivers. Besides, it also offers a usage-based insurance program and accident forgiveness.
Unfortunately, the CRASH Network gave a C- to its collision repair process. The drivers who experience DUI also are only mediocre and have no features like new car replacement, ride-sharing insurance, or lost deductibles.
2. USSA
USAA offers competitive rates for drivers with poor credit approximately $216 monthly. But it is only available for military members, military family members, and veterans.
One of its strengths is how it offers low rates also for drivers with accidents, DUI records, or speeding tickets. Besides, the rates are also good even for senior and young drivers. The company also provides accident forgiveness and replacement of a new car.
3. Nationwide
Nationwide becomes the third cheapest company with relatively reasonable prices for drivers with poor credit at $231 per month. Additionally, the complaint rate against Nationwide for car insurance is very low. If you’re an excellent driver, you can look into pay-per-mile options for lower costs based on actual mileage.
This car insurance for bad credit also has accident forgiveness, lost deductible options, and new car replacements. The only downside of this company is the collision repair process was only an average of C. The rates also can be high for drivers who cause accidents with injuries.
How Much Car Insurance for Bad Credit Cost?
The price of car insurance for poor credit is pretty high, averaging $209 per month. But, this price is not fixed, it will be tailored based on case by case of the drivers. Each company also offers multiple pricing, one can be cheaper than the other and vice versa. Below is the list of auto insurance costs:
- Geico: $202/month
- USAA: $216/month
- Nationwide: $231/month
- Westfield: $247/month
- Safe Auto: $279/month
- American Family: $280/month
- Travelers: $282/month
- Farmers: $327/month
- Allstate: $336/month
- Progressive: $351/month
How to Make the Car Insurance Rates for Bad Credit Cheaper?
A convenient way to lower your insurance rates when you have a poor credit score is to improve your score. Although this is not an easy or quick process, it is worth trying. Then, consider several ways below to lower the auto insurance quotes.
- First off, Making credit payments on time is one of the best ways to increase your credit, as payment history is the biggest factor in your credit history. Paying your insurance bills on time will not help your credit score, but missed payments can damage your score and rates.
- The ratio of credit you use compared to the credit available to you is known as the credit utilization ratio. So, keeping the ratio below 30% is the best way to improve your credit rating, as credit utilization accounts for 30% of your credit score.
- Next is increasing your deductible which will lower your premium. But, ensure you can cover the crucial coverage in the event of an accident or damage.
- Leverage all discounts, like driver discounts, student offers, or multiple policy discounts.
- You also need to evaluate potential premium increases before filing a claim. Having a clean claims history can help keep prices affordable. For smaller issues that you can afford, it may be better to take care of them yourself.
- The last and the most important is to shop around and compare. Do thorough research and obtain quotes from several car insurance providers to get the best deal.
Time to Get the Right Car Insurance for Bad Credit!
If you’ve got bad credit, we’re well aware of how hard it is to get the best low price. Fortunately, you still have options for car insurance. There are a number of providers you can get bad credit car insurance from. Typically, you will pay more for coverage, but you don’t have to settle for the first offer you come across. We encourage you to shop and compare several options to find the best car insurance. So, we hope our article can help drivers to get the proper car insurance for bad credit!