Best Car Insurance Companies for Bad Credit [2024]

Only a handful of states have banned auto insurance companies from using credit scores to raise rates. In the majority of areas, companies will charge more if you have a bad credit score. 

Because these rate increases are generally pretty steep, it’s important to compare quotes from the best car insurance companies. After all, getting your credit score back on track is hard when bad credit car insurance rates are thousands more than good credit rates. 

Continue reading to learn about the best companies for drivers with bad credit scores. 

Best Cheap Car Insurance Companies for Bad Credit 

Finding cheap car insurance with a bad credit score can be difficult, but this doesn’t mean drivers can’t find affordable rates. We curated lists of the best auto insurance companies below, from the overall best company to the best company for military members with bad credit. 

Best Car Insurance Companies Overall 

Below, you can see the average rates of the top auto insurance companies in the U.S. for drivers with bad credit scores. 

Auto Insurance Monthly Rates by Credit Score & Provider

Our study of the average full coverage car insurance rates for bad drivers showed that Geico has the cheapest rates on average for drivers with a bad credit score. Read our Geico car insurance review for more information about this company. 

We want to note that we’ve excluded USAA from this analysis. While USAA has the cheapest rates on auto insurance for bad credit drivers, it is only sold to military members, veterans, and their families.

Besides Geico and USAA, other cheap companies include Travelers and State Farm. Companies to avoid are companies like Liberty Mutual and Allstate. 

Best Small Market Company Car Insurance Companies for Poor Credit 

The companies we’ve covered in the previous section are all well-known, large companies. This means they will be available across the U.S., no matter what state you live in. 

However, there may sometimes be smaller, local companies in your area that charge less than the big-name companies. 

For example, local companies like Grange car  often offer cheaper rates for insurance. The best way to see if there is a better small market company in your area is to shop around and get a few quotes. 

Read more: The Grange Car Insurance Review 

Best Car Insurance For Military Members with Bad Credit

If you are a military member or a veteran, the best car insurance option is USAA. This auto insurance company has some of the cheapest average rates for drivers with bad credit scores.

USAA also has great coverage options and customer service, making it one of the more popular companies on the market for drivers. If you qualify for USAA, it is definitely worth looking at, regardless of whether you have bad or good credit. Check out our USAA car insurance review for more information.

Best Car Insurance Companies That Don’t Use Credit Scores

Whether a company uses credit scores as a rating factor depends on what state you live in. Only three states prohibit insurance companies from using credit scores as a rating factor — California, Hawaii, and Massachusetts.

A few other states restrict the use of credit scores, such as not allowing insurance companies to deny coverage on car insurance with bad credit scores. Check your state insurance laws to find the best local auto insurance company that doesn’t use credit scores. 

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Best Car Insurance Companies for Fair Credit 

Improving your credit score to fair credit can help reduce your auto insurance rates substantially.

Again, some companies that are better for drivers with fair credit scores will be the ones that are best for poor credit scores. USAA, Geico, and State Farm will all be solid choices for cheaper rates for fair credit scores. 

Best Car Insurance Companies for Good Credit 

If you have a good credit score, all insurance companies will offer you cheaper rates. 

USAA, Geico, and State Farm have some of the cheapest rates for drivers. However, remember that USAA is only for military and veterans, making Geico and State Farm the best choices for most drivers. 

Car insurance companies to avoid include Liberty Mutual and Allstate. 

How can I improve my credit score? 

There are a few ways you can work to improve your credit score and earn cheaper car insurance rates. Some tips are as follows: 

• Challenge any credit errors. Check for identity theft issues or errors in your credit score report. 
• Don’t apply for new credit cards. Don’t apply for new credit cards until your credit score improves. 
• Work with a credit agency. Contact a credit card agency to see if they can help you raise your credit score. 
• Pay off the full balance. Paying your balance every month means no interest payments.  
• Use automatic bill pay. Using automatic payments will ensure that you never miss a payment. 

Improving your credit score is helpful in the long run for much more than just car insurance rates, such as applying for loans. 

Why Car Insurance Companies Use Credit Scores 

Car insurance companies charge drivers with poor credit more per month for two reasons. One, auto insurance companies believe drivers with poor credit scores are more likely to miss payments. Missed payments are a hassle for both drivers and car insurance companies. 

The other reason is that drivers with poor credit are statistically more likely to file claims than those with good credit. Because of this, car insurance companies view drivers with poor credit as riskier to insure and raise their rates. 

However, we want to note that credit score is just one factor used to calculate your auto insurance rates. Your driving record, ZIP code, car make, and model, and other factors will also determine how much you pay for car insurance, making credit scores just one factor out of many. 

How Credit Affects Your Car Insurance Rates Rates by State

As you’ve seen from the average rates above, your credit score will greatly impact your pay. However, bear in mind that these averages will change based on your choice of insurance company and where you live. 

Where you live can greatly impact what you pay for car insurance. Some states will be cheaper on average for drivers with bad credit scores, while others may not permit credit card upcharges on insurance. As you can see, drivers in some states pay double or triple the average rates in the cheaper states. 

Can I get car insurance with no credit score? 

You can still get auto insurance coverage if you don’t have a credit score. However, you may be charged slightly more than a driver with good credit as you are an unknown risk to an insurance company. 

The good news is the insurer won’t charge you the same high rates as a driver with poor credit unless you have incidents on your driving record, like traffic tickets. 

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How to Find the Best Car Insurance With Bad Credit 

You’ll want to find the best auto insurance if you have a bad credit score, so shop around for quotes and read reviews of different auto insurance companies to start. Then, see which other companies offer cheaper auto insurance rates by following the tips listed below:

• Apply for discounts. Car insurance discounts at your company can help you save a significant amount. 
• Choose the right car. Pick a car that is cheaper to insure, such as a widely manufactured car with good safety ratings. 
• Improve your credit score. Working on improving your credit score will help you lower your rates. 
• Keep a clean driving record. Avoiding accidents and speeding tickets will help keep your rates low, even if you have a bad credit score. 
• Pay in full. You can often earn a discount if you pay your annual car insurance in full rather than paying monthly. 
• Only file necessary claims. If you can pay for repairs out of your own pocket, not filing a claim for minor damages can help prevent your rates from rising. 

Just because drivers have bad credit scores doesn’t mean they can’t still find savings on car insurance by following the tips above. 

Finding the Best Car Insurance Coverage for Your Car 

You may be able to find savings on car insurance by eliminating coverages. You can consider carrying minimum liability car insurance coverage if your car is old and depreciated in value. 

For example, if your car is only worth $5,000, and you’d pay over a thousand for comprehensive car insurance and collision coverage insurance on your car annually, it is worth dropping these coverages. Otherwise, you’ll end up paying more than your car is worth in a few years. Additionally, because the car isn’t worth much, you won’t lose too much if it is totaled. 

However, if you have a loan or lease on your car, you won’t be able to eliminate any coverages as your lender will require you to carry full coverage insurance. 

Case Studies: Best Car Insurance Companies for Bad Credit

Case Study 1: Elite Insurance Solutions

Mary Thompson, a 35-year-old single mother, found herself in a difficult financial situation after going through a divorce. With a low credit score, she was worried about finding affordable car insurance. After conducting thorough research, Mary came across Elite Insurance Solutions, a company known for providing fair rates to individuals with bad credit.

Despite her financial struggles, Mary was able to secure comprehensive coverage at a price she could afford. Elite Insurance Solutions not only considered her bad credit but also took into account her clean driving record and offered her a tailored policy that suited her needs.

Case Study 2: SecureDrive Insurance

John Davis, a recent college graduate, had just started working and was burdened with student loan debt. Due to financial mismanagement during his college years, he found himself with a poor credit score. Aware of the impact this could have on his car insurance premiums, John began searching for a company that could offer him competitive rates.

SecureDrive Insurance, a well-known insurer for individuals with bad credit, came to his rescue. They understood that a credit score does not define a person’s ability to be a responsible driver and offered John a policy with affordable rates, taking into account his financial situation and clean driving record.

Case Study 3: Reliable Coverage Auto Insurance

Sarah Hernandez, a small business owner, faced a significant setback in her credit score after her business experienced financial difficulties. Aware of the potential impact on her car insurance premiums, she was determined to find a company that would consider her circumstances and offer her reasonable rates.

Sarah discovered Reliable Coverage Auto Insurance, a reputable insurer that specializes in providing coverage to individuals with bad credit. The company evaluated her overall driving history, including her accident-free record, and offered her a policy tailored to her needs, taking into account her financial situation and providing her with the coverage she required.

The Final Word on the Best Car Insurance Companies for Bad Credit 

If you have a bad credit score, insurance companies will raise your auto insurance rates unless you live in one of the states where using credit scores for rates is prohibited. However, you may be able to find savings by shopping around at different companies and picking one of the best auto insurance companies for bad credit. 

If you want cheaper car insurance for bad credit, use our free quote comparison tool and compare rates today. It will help you find the cheapest car insurance quotes in your area.

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