Is car insurance based on credit score?

Your credit score is one of the many rating factors that are used to calculate how much you pay for auto insurance. How much it will affect your rates depends on your credit-based insurance score, which is calculated differently depending on the company.

Because auto insurance companies each decide how much weight is given to each rating factor, some companies might not rely as heavily on credit scores as others. However, if you live in a state where it's legal, you can expect some level of impact on your car insurance rate due to your credit.

Does credit score affect car insurance?

If you have good or excellent credit, you can expect to pay less for car insurance, while a fair or poor credit score means you'll pay more. Our data shows that drivers with poor credit pay 117% more on average than drivers with good credit. With fair credit, the difference is 28%.

Statistically, drivers with poor credit history are more likely to file a claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing.. Car insurance companies charge higher car insurance premiums to these drivers to cover the increased risk of insuring them.

In addition, your credit may affect the size of the down payment an insurance company requires and which payment options you are offered.

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Auto insurance for drivers with poor credit by state

In states where a credit-based insurance score is allowed to influence auto insurance rates, the impact of bad credit can be severe.

The cheapest state for car insurance with bad credit is Idaho at $2,333 a year on average. It's followed by Maine at $2,338 and New Hampshire at $2,599.

On the other side, the most expensive state for drivers with bad credit is Arizona at an average of $8,433 a year, followed by Louisiana at $7,297 a year and Florida at $6,364.

The amount your rate is hiked also depends on your driving record, where you live, your car insurance company and state insurance laws, among other factors. But to get an idea of how much more you pay as a driver with bad credit, take a look at the table below.

StateAverage annual rateRate with poor credit% increase$ increase
Alaska$1,676$3,373101%$1,697
Alabama$1,860$3,918111%$2,058
Arkansas$1,957$4,291119%$2,334
Arizona$1,812$8,433365%$6,621
Colorado$2,337$4,841107%$2,504
Connecticut$1,725$3,801120%$2,076
Washington, D.C.$2,157$6,080182%$3,923
Delaware$2,063$3,57373%$1,510
Florida$2,694$6,364136%$3,670
Georgia$1,970$3,91699%$1,946
Iowa$1,630$3,400109%$1,770
Idaho$1,428$2,33363%$905
Illinois$1,532$3,02898%$1,496
Indiana$1,515$3,348121%$1,833
Kansas$1,900$4,368130%$2,468
Kentucky$2,228$5,231135%$3,003
Louisiana$2,883$7,297153%$4,414
Maryland$1,746$3,484100%$1,738
Maine$1,175$2,33899%$1,163
Michigan$2,352$5,662141%$3,310
Minnesota$1,911$5,321178%$3,410
Missouri$1,982$3,978101%$1,996
Mississippi$2,008$3,87493%$1,866
Montana$2,193$4,05985%$1,866
North Carolina$1,741$3,11279%$1,371
North Dakota$1,665$3,524112%$1,859
Nebraska$1,902$4,144118%$2,242
New Hampshire$1,265$2,599105%$1,334
New Jersey$1,902$4,275125%$2,373
New Mexico$2,049$3,87489%$1,825
Nevada$2,060$3,72181%$1,661
New York$1,870$4,921163%$3,051
Ohio$1,417$2,75895%$1,341
Oklahoma$2,138$4,06390%$1,925
Oregon$1,678$3,364100%$1,686
Pennsylvania$1,872$3,937110%$2,065
Rhode Island$2,061$4,174103%$2,113
South Carolina$2,009$4,022100%$2,013
South Dakota$2,280$5,041121%$2,761
Tennessee$1,677$3,701121%$2,024
Texas$2,043$4,119102%$2,076
Utah$1,825$3,40086%$1,575
Virginia$1,469$3,098111%$1,629
Vermont$1,319$2,702105%$1,383
Wisconsin$1,664$3,22093%$1,556
West Virginia$2,005$4,215110%$2,210
Wyoming$1,758$2,98070%$1,222
Data updated in 2024

Cheapest car insurance for drivers with bad credit by company

The cheapest car insurance company for bad credit depends on a lot of factors, including where you live and your age. However, based on an analysis of average rates for a 40-year-old driver, Nationwide has the cheapest car insurance with bad credit at an average of $2,259 a year.

CompanyRate with good creditRate with poor credit% increase$ increase
Allstate$2,509$4,17766%$1,668
Farmers$2,387$5,050112%$2,663
Geico$1,763$3,03972%$1,276
Nationwide$1,548$2,25946%$711
Progressive$1,998$3,40570%$1,407
State Farm$1,984$8,654336%$6,670
Travelers$1,606$3,05390%$1,447
USAA$1,381$2,75399%$1,372
Data updated in 2024

Best auto insurance companies for drivers with poor credit

Nationwide is the best car insurance company for drivers with bad credit, according to our analysis of rates, AM Best financial stability ratings and National Association of Insurance Commissioners (NAIC) customer complaints. Nationwide offers cheap car insurance for bad credit, which pushes it to the top. It's followed closely by Progressive.

Finding affordable car insurance is important for drivers with poor credit scores, but it's also important to find a company you can trust, so we included two important auto insurance company reputation metrics in our ranking.

CompanyNAIC Complaint RatioAM bestInsurance.com ScoreAnnual PremiumOverall rating
State Farm0.7A++4.44$8,6544.24
Geico0.91A++4.27$3,0394.64
Travelers0.49A++4.25$3,0535
Nationwide0.64A4.12$2,2594.81
Progressive0.65A+4.26$3,4054.79
Allstate0.65A+4.28$4,1774.7
Farmers0.8A4.32$5,0504.4
Data updated in 2024

Car insurance rates for drivers with poor credit by city

While the use of credit for car insurance rates is determined at the state level, your city will impact how much you pay. Below we've gathered rates for drivers with bad credit for major cities in each state.

CityAverage annual premiumAverage monthly premium
Aventura$8,063$672
Avon Park$5,933$494
Bellair-Meadowbrook Terrace$6,259$522
Clearwater$6,941$578
Deland$6,054$505
Fellsmere$5,679$473
Fort Lauderdale$7,446$621
Hialeah$8,440$703
Jacksonville$6,219$518
Miami$8,318$693
Orlando$6,433$536
Palm City$5,988$499
Port St. Lucie$6,583$549
St. Petersburg$6,717$560
Tampa$7,345$612
Data updated in 2024

Does bankruptcy affect car insurance?

It can, but how much depends on your credit rating before the bankruptcy. If you have insurance and continue making your payments, you're less likely to see a rate increase at renewal, but some companies will check your credit once a year. A lower credit rating may lead to a rate increase.

Any type of bankruptcy filing will hurt your credit rating and will remain on your record for up to 10 years. During that time, car insurance companies that use credit as part of their risk assessment may increase your rate or may decline to offer you the lowest rates available. 

How to improve your car insurance credit score

Here's what you can do to improve your credit-based insurance score and get lower premiums:

  • Pay your bills on time and keep all your accounts in good standing. Late payments and collections will hurt you.
  • Keep your credit card balances low. The insurance score considers the amount you owe in relation to your credit limits. Avoid maxing out your credit cards.
  • Don't open unnecessary credit accounts. Too many new accounts signal trouble. Only open the credit accounts you really need.
  • Establish and maintain credit. The longer you maintain a decent credit history, the better. Having no or little credit history will lower your score.
  • Make sure your credit report is accurate. A mistake could ding your score. You have the right to get a free copy of your credit report each year.

If you're struggling to pay bills and have trouble keeping up with credit accounts, get professional finance advice. You can find free or low-cost help through the nonprofit National Foundation for Credit Counseling.

How to save on car insurance if you have bad credit

The number one thing you can do to save on car insurance with bad credit is to shop around.  No two car insurance companies will have identical prices for the same policy. The difference in what you pay from one carrierAn insurance carrier is the company that provides your car insurance policy and pays claims. to the next can vary by hundreds of dollars, sometimes more. So it pays to compare quotes even if you have bad credit.

You can also consider raising your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim., which will lower your rates; just make sure you can handle that deductible if you need to pay it.

Frequently asked questions: Car insurance for drivers with bad credit

What is no credit check car insurance?

Some companies will write car insurance without a credit check. In many cases, they are non-standard carriers (companies that will write car insurance for high-risk drivers including those with bad credit), so the rates may be higher.

What is the difference between credit-based insurance score and credit score?

Credit-based insurance scores are based on information in your credit history, but are calculated differently from the credit score used for loans and other financial transactions.

Why does credit score affect car insurance rates?

Poor credit has been shown to increase the risk of a claim. As a result, most states allow it to be used when calculating insurance rates.

Do insurance companies run your credit for a quote?

Some companies may use your credit when providing a quote. If you are asked for your social security number, the company will likely check your credit. It's possible to get quotes without this information, but the rates may not be as accurate.