Cheapest Car Insurance Companies for Bad Credit in 2023

Enter your zip code below to view companies that have cheap auto insurance rates.

Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

UPDATED: Jun 27, 2022

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Key Takeaways

  • Car insurance companies use credit history when considering risk
  • Four states have banned car insurance companies from using credit history when determining risk
  • Improving your credit score will help you get better rates

Car insurance companies use various factors to determine a driver’s risk, including credit scores. Someone with good credit is more likely to make timely payments than someone with poor credit. Therefore, improving your credit score can result in cheaper car insurance.

When comparing companies, you’ll find that USAA has the lowest rates for drivers with poor credit. Meanwhile, MetLife has the highest rates for people with poor credit scores. However, you can lower your rates by bundling discounts.

Continue reading to learn how to get the lowest rates from the best car insurance companies for bad credit.

Before learning about the best car insurance companies for bad credit, enter your ZIP code to get free auto insurance quotes in your area.

What are the best car insurance companies for bad credit?

According to the Insurance Information Institute, car insurance companies use multiple factors to determine rates. One of these factors is a person’s credit score, which indicates how likely they are to make timely payments.

It can be challenging to find the best affordable car insurance companies for bad credit. While most companies consider a person’s credit when determining rates, they weigh the importance of this factor differently.

Comparing the best car insurance companies’ rates for bad credit will help you find the most cost-effective coverage. The following chart shows how your credit score will affect your annual rates based on the company and credit type.

Average Annual Rates from the Best Car Insurance Companies for Bad Credit
CompanyPoor CreditFair CreditGood Credit
State Farm$2,527$1,482$1,235
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As you can see, rates are higher for customers with poor or fair credit than those with good credit. While USAA has the best auto insurance for poor credit, it only provides coverage for military members, veterans, and their immediate families.

GEICO has the lowest rates for non-military members of all credit types. Conversely, MetLife provides the most expensive coverage for drivers.

While most states permit the use of credit history when determining rates, California, Hawaii, Massachusetts, and Washington don’t allow companies to take credit history into account. This restriction is because legislators in these states feel that credit score evaluations put low-income drivers at a disadvantage.

Since these states don’t allow credit checks, it’s much easier to find insurance companies that do not use credit scores in these locations.

When comparing states that allow credit scores, you’ll find that North Carolina has the lowest average annual rate for drivers with poor credit at $1,148.66. Meanwhile, Michigan has the highest average yearly rate for drivers with poor credit at $8,640.46.

What is no-credit-check auto insurance?

As previously mentioned, most auto insurance companies consider your credit score when setting rates. However, some insurance companies don’t use credit scores, even if the state allows a credit check.

Coverage from no-credit-check auto insurance companies will usually cost more because of the increased risk. However, if your credit score makes it hard to obtain coverage, this might be a cheaper option than the most popular insurance companies.

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How can you save on coverage from the best car insurance companies for bad credit?

The best way for drivers to lower their car insurance rates is to compare quotes from various companies and bundle discounts. Combining various available discounts can help someone with poor credit significantly reduce their rates.

Auto insurance companies offer various deals to customers. Companies base these savings opportunities on multiple factors, including your vehicle, driving habits, and lifestyle. Asking about discount opportunities will ensure you find all the deals for which you qualify.

The following chart shows the standard discounts that can help you obtain the best car insurance companies’ quotes for bad credit.

Discounts from the Best Car Insurance Companies for Bad Credit
Car DiscountDiscount Eligibility
Accident-freeDrivers with no accidents in the past three to five years.
Anti-lock brakesCars with factory-installed anti-lock brakes.
Anti-theftCars include anti-theft devices, like alarms, tracking systems, and kill switches.
Defensive drivingCompleted approved defensive driving course.
Good studentHigh school or college students with at least a 3.0 grade point average.
HomeownerInsured owns a single-family home.
Low mileageDriving 5,000 to 15,000 miles per year.
Multi-car policyInsure more than one car on a single auto insurance policy.
Multi-policyBundling different types of insurance.
Paid in fullPolicy is paid in one payment.
Safe driverDisplay safe driving habits, like having passengers wear seat belts, low driving speeds, and less aggressive driving.
Student away at schoolCollege-aged children that attend college over 100 miles away and leave their car at home.
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Some companies provide a discount for taking part in a telematics program. These programs use a mobile app or device to monitor your driving habits, such as speed and braking. If the telematics device shows that you’re a safe driver, you get lower rates.

In addition to these discounts, drivers with bad credit can lower their auto insurance rates by improving their credit scores. There are multiple ways that you can increase your credit rating, including:

  • Setting up automatic bill pay: Automatic bill pay will ensure that you pay all your bills on time.
  • Paying off balances every month: Your credit score indicates the likelihood that you’ll make timely payments, so paying off your balances each month will improve your rating.
  • Working with credit agencies: Applications for additional credit cause hard credit inquiries, which can cause your credit score to drop.
  • Disputing errors: Sometimes, a poor credit score results from an erroneous report of payment delinquency or identity theft. Regularly checking your credit report and disputing any errors will allow you to dispute any errors.

It will usually take a few months before you start seeing an improvement in your credit score. In the meantime, there are some additional ways that you can lower your insurance rates. The following tips will help you lower your rates while you improve your credit score.

Change Your Coverage Type

Car insurance companies price auto coverage individually, so the amount you pay depends on how much coverage you have. Therefore, only carrying the minimum required coverage can result in significant savings.

You can also raise your deductible to save money. This move will cause you to pay more if you get into an accident, but insurance companies will usually lower your rates because it decreases their risk.

Switch Car Insurance Companies

Most car insurance companies use the same factors when determining rates but weigh those factors differently. For example, while one company might consider bad credit an urgent concern, others might only consider it a minor setback.

If your rates are higher than you can afford, there’s a chance that another company will provide lower rates. Asking about all saving opportunities when inquiring about rates will ensure that you get the most cost-effective coverage possible.

Consider Your Vehicle

Insurance companies consider the risk of specific vehicles when determining rates. For example, sports car owners are likely to drive faster than other drivers, making them riskier to insure. As a result, car insurance costs more for those drivers.

If you own an expensive car that insurance companies consider high risk, switching to an inexpensive and safer vehicle could result in your rates decreasing. It can also help if you pay off your loan, something that’s easier to do with a less expensive car.

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Why do the best car insurance companies for bad credit use credit history?

Car insurance companies use various data points to determine the risk of drivers. These data points come from experiences with customers and studies from the Federal Trade Commission, and applicants deemed riskier will receive higher rates.

Studies have shown that drivers with poor credit scores are more likely to file claims than customers with good credit. Additionally, payouts to customers with poor credit are generally higher than other credit pools. These factors make drivers with poor credit riskier to insure.

Insurance companies also know that credit scores and income tend to rise and fall together. Therefore, someone with poor credit likely has lower earnings, making them less likely to pay for minor damages out of pocket instead of filing a claim.

When you buy car insurance, companies usually make soft credit inquiries, which shouldn’t impact your credit score. Additionally, buying coverage is the only action that will affect your credit score. So shopping for quotes won’t harm your credit score either.

Best Car Insurance Companies for Bad Credit – The Bottom Line

Car insurance companies often use credit scores when determining rates. You’ll find that poor credit usually results in higher rates, but bundling discounts and shopping for quotes will help you find the best quotes.

Generally, USAA has the lowest rates for drivers with bad credit, and GEICO has the lowest rates for non-military members. On the other hand, MetLife has the highest auto insurance rates for people with bad credit.

Understanding where to find the best car insurance companies for bad credit and how to lower your rates will help you get affordable coverage.

Now that you know about the best car insurance companies for bad credit, enter your ZIP code to find free auto insurance rates in your area.

Free Auto Insurance Comparison

Enter your zip code below to view companies that have cheap auto insurance rates.

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