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Bad credit insurance costs American drivers significantly more than most realize. A poor credit score — generally below 580 — can nearly double your car insurance premiums. Drivers with bad credit pay an average of $4,644 per year for full coverage. That compares to roughly $2,257 for drivers with good credit. The difference adds up to about $200 more per month. Approximately Why Credit Scores Affect Your Car Insurance Rates
Insurance companies view credit history as a predictor of risk. Statistically, drivers with lower credit scores tend to file more claims. A Federal Trade Commission study confirmed that credit-based scores do correlate with claim frequency. That is why bad credit insurance rates run so much higher. In most cases, your insurer checks your credit at both new policy quotes and renewals. The penalty varies widely by company. For example, some insurers charge 91% more for poor credit compared to excellent credit. Others charge as much as 236% more for the same coverage. Drivers with very poor credit — scores below 523 — can face premiums as high as $6,254 per year. That is nearly four times what someone with exceptional credit might pay. Not all insurers penalize bad credit equally. Shopping around is essential. Typically, rate differences between companies can be hundreds of dollars for the same driver profile. The table below shows how major insurers compare for drivers with poor credit.Finding the Cheapest Bad Credit Insurance by Company
| Insurer | Credit Penalty (Poor vs. Excellent) | Notes |
|---|---|---|
| Nationwide | 91% | Smallest penalty among major carriers |
| GEICO | 133% | Often cheapest overall for bad credit |
| Progressive | 212% | Widely available but steep penalty |
| State Farm | 236% | Largest credit-based penalty |
GEICO and Nationwide consistently rank as the most affordable options for bad credit insurance shoppers. USAA also offers competitive rates but is only available to military members and their families. In addition, some newer companies like Root Insurance have moved away from using credit scores entirely. Getting at least three quotes is a smart starting point.
States That Ban Credit-Based Bad Credit Insurance Scoring
Three states fully ban the use of credit history in auto insurance pricing. California, Hawaii, and Massachusetts prohibit insurers from considering your credit score when setting premiums. Michigan also restricts credit use for rate-setting purposes. If you live in one of these states, your bad credit insurance costs should not be affected by your credit history.
However, several other states are considering similar bans. As of 2026, Iowa, New York, Oklahoma, and Pennsylvania all have active bills to prohibit credit-based insurance scoring. For example, New York’s proposed legislation would prevent insurers from using credit data for both auto and homeowners policies. These changes could help millions of drivers find more affordable coverage.
How to Lower Your Bad Credit Insurance Premiums
Even with poor credit, there are practical ways to reduce your rates. First, enroll in a telematics or usage-based insurance program. Programs like Nationwide SmartRide and GEICO DriveEasy can cut premiums by 15% to 40% based on your driving habits. Some programs will not raise your rate even if your data shows risky patterns.
Second, consider bundling your auto and renters or homeowners insurance. Bundling typically saves 5% to 25% on your premium. Raising your deductible from $500 to $1,000 can lower costs by another 10% to 20%. For older vehicles with low market value, dropping comprehensive and collision coverage may also make sense.
Finally, work on improving your credit score over time. Paying bills on time and reducing credit utilization directly improves your insurance score. Many insurers recheck your credit at renewal. As a result, a better score could lower your bad credit insurance costs within six to twelve months. Ask your insurer about good driver discounts, low-mileage discounts, and defensive driving course credits as well.
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Frequently Asked Questions
How much more does bad credit insurance cost compared to good credit?
Drivers with poor credit pay an average of 69% to 98% more than drivers with good credit. In dollar terms, that is roughly $2,100 to $2,500 more per year. However, the exact amount depends on your insurer, location, and driving record.
Can I get car insurance without a credit check?
In California, Hawaii, and Massachusetts, insurers cannot use your credit score to set rates. In most other states, nearly all major insurers will check your credit. However, some companies like Root Insurance have stopped using credit scores entirely, making them a good option for bad credit insurance shoppers.
Will improving my credit score lower my car insurance?
Yes. Most insurers recheck your credit-based insurance score at policy renewal. Typically, improvements in payment history and lower credit utilization lead to lower premiums. For example, moving from poor to fair credit could save you $1,000 or more per year on your bad credit insurance costs.
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Official Sources & Resources
For verified information on auto insurance regulations and consumer protection:
- NAIC (National Association of Insurance Commissioners): naic.org
- Insurance Information Institute: iii.org
- Federal Trade Commission — Auto Insurance: consumer.ftc.gov
- USA.gov — Car Insurance: usa.gov/car-insurance
Content last reviewed June 2026. If you notice any outdated information, please contact us.