How To Get Car Insurance With Bad Credit

Last Updated on October 27, 2020

Even if you’re normally fiscally responsible, it’s easy to let your credit slip during a tough financial period. However, poor credit can make things challenging later on when you’re trying to do things like getting car insurance. Insurers want to know that you will make your payments on time, and if you have poor credit, this makes you less trustworthy to them. They can use this as an excuse to drive up the cost of your car insurance, or in the worst cases, deny you insurance altogether.

However, if you have poor credit, don’t worry – there are still ways you can get reasonably priced car insurance. You will just have to do a little bit more shopping around before making a purchase. Here are some tips to help you find reasonably priced car insurance even with poor credit.

Look for insurance companies that don’t check your credit score.

get insurance with bad creditLuckily, there are actually some companies that won’t check your credit score at all when determining your premiums – you just need to look out for them. If you live in California, Massachusetts, or Hawaii, insurers actually aren’t allowed to use your credit score as a factor when determining your premiums, so you’re in luck if you live in one of these three states. As a New York resident, however, you’ll have to get creative. Look not only at the big national insurance companies, but also local and regional ones when shopping.

Before you even get a quote from the company, find out what factors they use in determining your premiums. This will help you rule out companies that will raise your rates very quickly. However, just because a company does check your credit score doesn’t necessarily mean they will charge you a high rate – some insurers actually do have programs for those with poor credit. If you can’t find a reliable option that doesn’t check credit scores, then it’s time to start comparing quotes from bigger agencies that do.

Consider usage-based auto insurance.

Another good solution for those with bad credit is usage-based auto insurance. These auto insurance companies determine your premiums based on your driving record and how much you actually drive in terms of mileage. If you are a very safe driver or don’t drive often, then these insurance programs are one of the best ways you can save money if you have poor credit.

Continually reassess the type and amount of insurance you need.

If you have poor credit, one of the ways you can save money is by minimizing your coverage. Of course, you will still need to meet your state’s requirement for car insurance coverage, but beyond that, you might actually be losing money with high car insurance premiums. This is particularly true as your car gets older since cars depreciate at a very fast rate. If you have a comprehensive policy designed to cover your car in the event of a complete replacement, you can determine if it’s worth it by adding the current cost of your vehicle to the deductible. If that number is lower than the amount in premiums you pay for the comprehensive insurance, you can get rid of it. You can find the current value of your vehicle on sites like Kelly Blue Book – don’t use the amount you paid for the car initially, since your car will almost certainly have depreciated since then. The bottom line is, if you’re paying more in premiums than you would get if you filed a claim, you’re not getting the value you should be out of your insurance policy.

Be very smart with your driving.

If you have bad credit, you’re going to need to be very diligent about driving safely, since any accident or claim could quickly make your premiums unaffordable. If you consistently drive safely and keep your record clean, your insurance company may give you a small discount to bring your premiums down slightly. It will also reduce your chances of having to file a claim. If you do experience any damage to your car, do the math before filing a claim. Since claims result in a rate increase, it may be cheaper, in the long run, to just pay for the car repair yourself. Reducing the amount of time you spend driving can also be quite helpful, as this puts you at less risk of getting in an accident. Biking, walking, or taking public transit may be good alternatives.

Always pay your bills on time.

It probably seems obvious, but it’s important to always pay your car insurance bills on time. Even if you have developed poor credit after financial problems in the past, paying on time is a way to show your insurer that you are responsible. If you get in the habit of paying all of your bills on time and avoid using too much of your available credit, your credit score will also start to increase. Remember that just because your credit score is poor now doesn’t mean you’re stuck with it forever – responsible financial habits can help you fix things and get your car insurance premiums down in the future.

Don’t be too discouraged if you have bad credit and are looking for car insurance. While some insurers do take your credit into account, not all do, and many of them have discounts available that you can take advantage of.

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