⚠️ The Credit Score Penalty
Drivers with poor credit pay an average of 115% more for car insurance than those with excellent credit—even with identical driving records. A safe driver with bad credit often pays more than a dangerous driver with good credit.
Excellent credit (750+)
$1,800/year
Poor credit (below 580)
$3,870/year
Best Insurers for Bad Credit
GEICO
GEICO tends to weigh credit less heavily than competitors. Their direct model and efficiency allows lower rates across the board.
*Average for poor credit driver with clean record
Progressive
Progressive's Snapshot program lets you prove safe driving to offset credit impact. Good drivers can save an average of $322/year.
USAA
If eligible, USAA places less emphasis on credit and offers the lowest rates overall regardless of credit score.
States That Ban Credit-Based Pricing
If you live in one of these states, insurers cannot use your credit score to set rates:
Note: Maryland and Oregon have partial restrictions. Several other states are considering bans.
How to Lower Rates with Bad Credit
đź“Š Use Telematics
Programs like Progressive Snapshot and GEICO DriveEasy base discounts on actual driving, not credit.
📦 Bundle Policies
Bundling home/renters with auto can save 10-25%, helping offset credit penalties.
đź’ł Improve Your Credit
Even small credit improvements can lower rates. Re-quote every 6 months as your score improves.
🔍 Shop Around
Credit impact varies dramatically by insurer. Get 5+ quotes—some companies may penalize you less.
Frequently Asked Questions
Why do insurers use credit scores?
Insurers claim credit scores correlate with claims likelihood. Studies show people with lower credit file more claims, though critics argue this unfairly punishes people facing financial hardship through no fault of their own.
Does checking insurance quotes hurt my credit?
No. Insurance quotes use a "soft pull" that doesn't affect your credit score. Shop freely without worry.
How much can I save by improving my credit?
Moving from "poor" to "fair" credit can save 20-30%. Moving to "good" credit can save 40-50%. It's one of the biggest factors in your rate.
The Bottom Line
Bad credit can cost you $2,000+ per year in extra premiums. Your best strategies: shop aggressively (credit impact varies by insurer), use telematics to prove safe driving, and work on improving your credit over time. If you're in California, Hawaii, Massachusetts, or Michigan, you're protected from credit-based pricing entirely.
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