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Credit scores affect car insurance rates for most drivers. Car insurance companies in almost every state are legally allowed to run your credit when you apply for a policy. The only states that prohibit insurance providers from using credit as a rating factor are California, Hawaii, Maryland, Massachusetts, Michigan, and Washington.
Insurance companies often consider your credit score when setting auto insurance premiums because it indicates how likely you are to file a claim. Drivers with excellent credit are less likely to file claims than drivers with poor credit, based on insurance industry data. But it may be possible to get car insurance with no credit check.
Your credit score tells insurance companies how likely you are to file insurance claims.
Some car insurance companies insure drivers without checking their credit, and some states prohibit the use of credit scores.
Usage-based and telematics car insurance policies may not require a credit check.
How to get no-credit-check auto insurance
It’s possible to get approved for car insurance with no credit check. For example, if you live in a state that doesn’t allow insurers to run a credit report, you can avoid a credit check. Even if you have a poor credit score, it shouldn’t affect your rate if you live in one of these states.
Another way to get no-credit-check car insurance is to purchase a usage-based insurance policy. With this type of car insurance, your monthly premium is based on the distance you drive, rather than a fixed monthly premium. Some telematics insurance policies, which track your driving habits, are also available without a credit check.
Learn More: How Much Car Insurance Do I Need?
How does your credit score affect car insurance pricing?
Credit scores affect car insurance rates because they indicate how likely a driver may be to file insurance claims.
“There is a strong correlation between drivers with bad credit and higher-than-usual insurance claims,” says Nick Schrader, an insurance agent with Texas General Insurance. “Drivers with poor credit may also be more likely to miss payments or have their insurance lapse.”
When drivers fail to pay their insurance premiums or file an insurance claim, their insurance company loses money. To offset these potential risks, most car insurance companies charge higher rates for drivers with poor credit and lower rates for drivers with good credit.
To help you understand how much you might pay for car insurance based on your credit score, Insurify data scientists analyzed rate data for every credit tier. Here are the average car insurance premiums for drivers with excellent credit, good credit, and poor credit:
|Credit Tier||Average Monthly Rate|
|Excellent (800 and above)||$137|
|Poor (570 and below)||$231|
Additional insurance cost-rating factors to consider
Your credit score isn’t the only factor that can affect your car insurance premium. Here are some other criteria that insurance companies consider when calculating your rate:
Location: Your state and ZIP code have a big impact on the cost of your car insurance. For example, if you live in an area with a high risk of severe weather or a high rate of vehicle theft, you may pay more for insurance.
Age: Young drivers who are newly licensed have an increased risk of accidents, and therefore, pay the highest rates. Car insurance premiums start to drop as drivers gain more experience behind the wheel.
Driving record: If you have a clean driving record with no recent accidents or traffic violations, you’ll pay less for car insurance than drivers with one or more infractions on their record.
Gender: Statistically, men are more likely to get into accidents than women. As a result, males usually pay higher auto insurance rates than females.
Which states don’t allow credit score checks?
Not every state allows insurance companies to use a credit-based insurance score. The following states currently prohibit insurance companies from using credit as a rating factor:
These states prohibit the use of credit checks for a few reasons. First, many people are unaware that insurance companies check credit scores when they apply for car insurance. Additionally, many people don’t understand how or why their credit score affects their premium.
Advocacy groups have also argued that using a credit-based insurance score targets low-income individuals and minorities, and isn't necessarily an indicator of an individual’s likelihood to experience insurance losses.
Which insurance types don’t require a credit score check?
While most car insurance policies require a credit check, certain types of insurance don’t. These two types of auto insurance may not require a credit check:
Usage-based coverage: With a usage-based car insurance policy, your premium is based on the number of miles you drive each month. You pay a small monthly fee plus an additional rate for every mile you drive. It can be a good option if you drive infrequently, but this type of policy could be more expensive if you drive a normal amount (around 10,000 miles or more per year). Based on Insurify rate data, Mile Auto, one of the most well-known usage-based insurance companies, has an average premium of $121 per month. Nationwide SmartMiles and Allstate DriveWise are also popular usage-based insurance policies.
Telematics: A telematics car insurance policy uses a device in your vehicle to track your mileage and driving habits, like acceleration, brake force, and when you drive (at night versus during the day). If you practice safe driving habits consistently, you can be rewarded with a lower rate. A few major insurance companies offer telematics insurance programs, like Progressive Snapshot, State Farm Drive Safe and Save, and Allstate Drivewise.
Check Out: Why Do Car Insurance Companies Deny Claims?
How can you get car insurance with bad credit?
The best way to get car insurance with bad credit is to comparison shop. Using a comparison-quote platform makes it easy to see which car insurance company can offer you the lowest rate for your coverage needs.
After providing some information about yourself and your vehicle, you’ll get matched with personalized quotes from top-rated insurers in your area. Comparing quotes all in one place makes it easy to find a policy that fits your needs.
Cheap auto insurance for drivers with bad credit
Based on Insurify’s analysis of recent rate data, the cheapest auto insurance companies for drivers with bad credit scores are Amigo USA, Kemper Preferred, and Farmers/21st Century. These companies may require a credit check, but if you have poor credit or no credit, you can still get an affordable rate.
In the table below, you can see the cheapest insurers for drivers with a low credit score and the average monthly premium for liability-only coverage:
|Company||Average Monthly Cost|
Tips for raising your credit score
If you have poor credit, raising your score can help you get a lower car insurance rate. Here are a few tips for improving your credit score:
Make on-time payments. Paying your bills on time is important, especially if you want to improve your credit score. If you have trouble remembering due dates, consider enrolling your accounts in automatic payments so you never risk missing a payment.
Pay down your balances. If you have debt, whether it’s loan debt or credit card debt, work on paying down your balances. Also, keep an eye on your credit utilization (how much of your available credit you’re using compared to your total available credit). The lower your credit utilization is, the better your credit score will be.
Limit new accounts. Avoid opening new credit cards or taking out new loans frequently. This can cause your credit score to drop. Only open new accounts when you really need them, and make sure you can afford the monthly payments beforehand.
Cheap car insurance companies for drivers without credit history
It’s not just poor credit that can affect your car insurance rate. Having no credit history can also increase your premium. Based on Insurify’s rate data, Mile Auto is the cheapest insurer for drivers with no credit history, with an average premium of $81 per month for liability-only car insurance. National General and Kemper Specialty also offer some of the lowest rates for drivers with no credit, according to recent premium data.
The table below outlines some other insurance companies that offer policies to drivers with no credit history:
|Company||Average Monthly Cost|
No-credit-check car insurance FAQs
Here are answers to some commonly asked questions about getting car insurance with no credit check.
Yes, you can get car insurance with no credit check. But you may be limited to certain types of car insurance, like usage-based auto insurance and telematics auto insurance.
Car insurance companies check your credit score because it indicates how likely you are to have insurance losses. In general, drivers with excellent credit pay the lowest rates, whereas drivers with bad credit or no credit pay the highest rates.
One of the best ways to get cheap car insurance with bad credit is to use an online quote-comparison platform. With a single application, you can see which insurers can offer you the lowest rates based on your credit score, and the type and amount of coverage you want.
Yes, you can get car insurance without a credit history, but you’ll probably pay a higher premium. If you have no credit, consider applying for usage-based or telematics car insurance policies, which may not require a credit check.
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Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Service's database of auto insurance rates. With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums.
- National Association of Insurance Commissioners. "Credit-Based Insurance Scores." Accessed December 20, 2022
- Insurance Information Institute. "Background on: Pay-as-you drive auto insurance (telematics)." Accessed December 20, 2022
- Insurance Information Institute. "Background on: Credit scoring." Accessed December 20, 2022
- Centers for Disease Control and Prevention. "Teen Driver and Passenger Safety." Accessed December 20, 2022
- Insurance Information Institute. "What determines the price of an auto insurance policy?." Accessed December 20, 2022