Finding affordable auto insurance can feel overwhelming—especially if you have bad credit. Many drivers assume poor credit automatically means sky-high premiums, but that’s not always the case. With the right strategies and knowledge, you can still secure cheap car insurance for drivers with bad credit without sacrificing essential coverage.
In this guide, we’ll explain how credit affects car insurance rates, which companies are more credit-friendly, and proven tips to lower your premiums even if your credit score isn’t perfect.
Why Credit Score Affects Car Insurance Rates
Insurance companies use several factors to calculate risk, including driving history, age, location, and credit-based insurance scores. Studies show that drivers with lower credit scores tend to file more claims, so insurers often charge higher rates to offset that risk.
However, it’s important to know:
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A bad credit score does not make you uninsurable
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Not all insurers weigh credit the same way
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Some states restrict or ban the use of credit scores
This means affordable options still exist if you know where to look.
What Is Considered Bad Credit for Car Insurance?
While definitions vary, most insurers consider:
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Excellent credit: 720 and above
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Good credit: 680–719
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Fair credit: 580–679
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Bad credit: Below 580
Drivers with bad credit may pay 30% to 80% more than those with excellent credit, but shopping smart can significantly reduce this gap.
Can You Get Cheap Car Insurance With Bad Credit?
Yes—absolutely. While bad credit may increase your rate, it doesn’t eliminate your chances of finding affordable coverage. Many insurance companies focus more on driving behavior than financial history.
If you have:
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A clean driving record
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No recent accidents or claims
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Low annual mileage
You’re already in a strong position to qualify for lower premiums.
Best Tips to Get Cheap Car Insurance With Bad Credit
1. Shop Around and Compare Quotes
Prices can vary dramatically between insurers. One company may heavily penalize bad credit, while another barely considers it.
👉 Tip: Compare quotes from at least 5 providers to find the most affordable option.
2. Look for Credit-Friendly Insurance Companies
Some insurers are known for offering cheap auto insurance for drivers with bad credit, especially regional and usage-based providers.
These companies often emphasize:
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Driving history
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Vehicle type
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Mileage
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Claims record
3. Choose Minimum Required Coverage
If your car is older and paid off, consider liability-only coverage instead of full coverage. This can significantly reduce your monthly premium.
⚠️ Make sure the policy still meets your state’s legal requirements.
4. Increase Your Deductible
Raising your deductible from $500 to $1,000 can lower your premium. Just ensure you can afford the deductible if you need to file a claim.
5. Improve Your Credit Over Time
Even small improvements can lead to lower rates at renewal.
Simple steps include:
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Paying bills on time
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Reducing credit card balances
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Avoiding new credit applications
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Checking your credit report for errors
6. Ask About Discounts
Many drivers miss out on discounts they already qualify for. Ask insurers about:
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Safe driver discounts
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Low-mileage discounts
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Bundling home and auto insurance
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Automatic payment discounts
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Defensive driving course discounts
7. Consider Usage-Based or Pay-Per-Mile Insurance
If you drive infrequently or have safe driving habits, usage-based insurance can offer some of the cheapest car insurance rates for bad credit drivers.
These programs track:
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Speed
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Braking
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Time of day driving
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Mileage
States Where Credit Has Less Impact on Insurance Rates
Some states limit or ban the use of credit scores in auto insurance pricing. In these locations, bad credit has little or no effect on premiums.
If you live in one of these states, you may already qualify for lower rates regardless of credit history.
How Much Does Bad Credit Increase Car Insurance?
On average:
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Drivers with excellent credit may pay $1,200 per year
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Drivers with bad credit may pay $1,800–$2,200 per year
However, these numbers vary widely. With the right insurer, the difference can be much smaller.
Common Myths About Bad Credit and Car Insurance
Myth 1: You can’t get insured with bad credit
✔️ False—coverage is always available
Myth 2: All insurers charge the same
✔️ False—rates vary significantly
Myth 3: Improving credit won’t help
✔️ False—better credit can lower future premiums
Final Thoughts: Affordable Car Insurance Is Still Possible
Having bad credit doesn’t mean you’re stuck paying outrageous insurance rates forever. By comparing quotes, choosing the right coverage, and improving your financial habits over time, you can find cheap car insurance for drivers with bad credit that fits your budget.
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