Best and Cheapest Car Insurance for Drivers With Bad Credit

Finding affordable car insurance can be tricky when you have a poor credit history. Insurance providers consider your credit history to calculate a credit-based insurance score, among other criteria, to determine your premium, so a poor credit history can mean higher insurance costs.

However, each insurer has its own proprietary underwriting process, so the impact of your credit score on your insurance costs can vary significantly across different companies. It's always a good idea to check prices and compare quotes from different insurance companies to find the best deal, especially if you have a poor credit score.

Drivers with less-than-stellar credit can still find affordable coverage, with Nationwide and GEICO offering the two most cost-effective options on average.

• Nationwide: $1,374 annually and $115 monthly
• GEICO: $1,775 annually and $148 monthly

Drivers with bad credit usually pay more for car insurance because insurance companies view them as a higher risk. This is because actuarial data shows drivers with poor credit are likelier to file insurance claims.

Exploring the most affordable car insurance providers for those with a poor credit history will help you obtain necessary coverage without overpaying. Use the table below to find options based on your age and desired coverage level.

MoneyGeek found that Nationwide offers the cheapest car insurance rates in 14 states for drivers with bad credit. GEICO offers the cheapest rates for poor credit drivers in four states — Colorado, Connecticut, Delaware and Michigan — and the District of Columbia.

Some regional insurers, such as Concord Group and American Family, offer competitive rates in certain states but are not available nationally. However, the cheapest rates available can vary depending on your individual factors, such as your driving record, age and location. Always get quotes from multiple insurers in your region to ensure you're getting the best possible rate.

Discover how premiums can change based on your location, preferred coverage and age using the table below.

Insurers increase premiums for drivers with bad credit due to the increased risk of them filing a claim, according to the National Association of Insurance Commissioners (NAIC). In states that allow credit-based insurance scores, FICO notes that 95% of personal insurers use them to determine applicants' risk.

While an affordable premium is an important factor when selecting an insurer, it’s equally important to opt for a reputable provider that offers great customer service. MoneyGeek found that the best car insurance provider for drivers with poor credit is Nationwide followed by Travelers and GEICO. However, the best choice for you depends on your needs.

When you have bad credit, it’s tempting to veer towards no-credit-check car insurance companies. After all, it means your premiums will not be impacted by your credit but rather by other factors, such as your age, location and more.

Not many major companies skip credit checks, but you may be able to find a local insurer in your area that does. Certain states also prohibit insurers from using your credit data to determine rates: California, Hawaii, Massachusetts and Michigan.

Your credit history, which includes your credit score, can affect your insurance premium. Actuarial data shows that people with lower credit scores are more likely to file claims, so insurance companies use credit-based insurance scores to assess risk (except in states that ban this practice). This means that people with poor credit histories are considered high-risk drivers and are more likely to pay higher premiums, so good drivers will not subsidize bad drivers.

There are a few things you can do to improve your credit score and credit history:

• Pay your bills on time
• Keep your credit utilization low
• Dispute any errors on your credit report

Increasing your credit score is not a quick process, but if you follow the above steps, you'll see improvements over time.

Your credit history, which includes your credit score, can influence your insurance premiums in most states — better credit histories and higher scores can lead to lower rates, while lower scores may mean you'll pay more.

For example, with Nationwide, someone with an excellent credit score might pay around $873 per year on average, whereas someone with a poor score could pay about $1,374 annually.

However, your credit score isn't the only factor that matters — insurers also consider factors like your age, driving history and the type of car you drive to determine how much you'll pay for car insurance. To better understand how car insurance works, keep these variables in mind along with your credit score.

Just because your credit rating is low doesn’t mean you can’t shop for the best possible auto insurance. There are several ways to lower your insurance rates, including:

If you are a driver with a poor credit record, working to improve your credit is the best way to reduce your insurance premiums. There are a number of ways to work toward improving your credit score, including:

Getting auto insurance with bad credit can be a challenge if you live in a state where insurers are allowed to use your credit history to determine premiums. Our answers to some of the most frequently asked questions about auto insurance for bad credit drivers provide more insight on this topic.