Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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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...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • If you have bad credit, your car insurance options may be limited to high risk or no-credit check car insurance companies
  • Some car insurance companies will overlook a bad credit score with a clean driving record
  • Always speak with your preferred auto insurance companies no matter what your credit score is and shop around

Have you ever wondered if there are companies who don’t use credit scores? Credit scores play a major role when it comes to car insurance.

Things like determining premiums and rate growth are almost fully dependent on credit scores.

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How much does a bad credit score affect your car insurance rates?

This depends on a number of factors including which car insurance company is reviewing your application and your overall risk profile.

Some car insurance companies will overlook a bad credit score with a clean driving record, others may assess a small additional premium for the higher risk while others might deny you coverage altogether.

While it’s not always possible to prevent negative marks on your credit report, it’s important to try and maintain good credit as it not only can affect the cost of car insurance but also interest rates and eligibility for financial programs like credit cards and loans.

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What is a bad credit score?

Many experts agree anything under 620 is a bad credit score while others prefer to see scores over 660.

Before applying for car insurance it’s a good decision to pull a copy of your credit report to see if there is any information you can correct.

The upside is most consumers will never be affected by a credit score when applying for car insurance although there is always the possibility for those with bad credit.

Why are credit scores important?

This is a highly debated yet fair question since how you pay your credit card bills does not affect your driving ability.

The defense from car insurance companies, however, is that it’s about risk of a driver filing a future claim and consumers with bad credit have been proven to have a higher risk of filing a claim.

This may not mean they will file higher claims, just more claims. The reasoning could be due to limited access to credit drivers with poor credit have or the inability to pay for minor claims out of pocket.

Whatever the reason it has been proven that people with bad credit do pose a higher risk and car insurance companies simply have to account for this risk.

Some will charge a higher premium, others will overlook a bad credit score with compensating factors while a few will even deny coverage.

Who has the best car insurance for people with bad credit?

If you have seriously bad credit, your car insurance options may be limited to high risk or no-credit check car insurance companies.

However, the most important thing is never to assume you have such bad credit that a car insurance company will not insure you.

Always speak with your preferred auto insurance companies no matter what your credit score is and shop around.

Rates vary from one provider to another and even with a few blemishes, you might be surprised that many of the major brands will still offer very affordable rates.

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