Can I get cheap car insurance with bad credit?

Not long ago car insurance companies started using your credit score as a factor in the risk assessment for calculating your car insurance premiums. While car insurance is still readily available for drivers with bad credit rates can be much higher than those for drivers with good credit. To find the best insurance rates, type your ZIP code into our FREE ZIP code search and compare quotes instantly!

Some states like California have banned the use of credit scores as a factor in calculating car insurance rates however most states still allow the practice so you need to understand your credit report and what you can do to improve your score. Credit reports determine your ability to finance a large number of things so even without the need for car insurance these tips can help most consumers. Comparing company quotes can also help you save more money! Try our ZIP code search for FREE and get the best rate on car insurance today!

Do you need car insurance now?

Repairing credit can take some time so the quickest step to finding the best car insurance rates with bad credit is to start car insurance comparison online. Simply enter your ZIP code, and we can help you get FREE car insurance quotes today!

About Your Credit Report

Credit reports are often long, confusing and very difficult to read but its important to understand the basic elements of a credit report before searching for any financial product. Your credit report includes a number of personal items including:

• Full Legal Name and any Aliases
• Known Street Addresses
• Revolving/ Installment Accounts (open and closed) with limits
• Payment History (up to 10 years) for all your accounts
• Inquires: A count of people who have viewed your credit report
• Credit Score: A number representing where you fall compared to other people. Above 700 is good – below 620 is not so good. In between 620 and 700 is fair.
• Collection Account: Accounts that have been charged off or sent to collection
• Public Filings: Such as judgments or bankruptcy or foreclosures

The information in your credit report is used to help determine (a) your credit worthiness and (b) your debt to income ratio. The exact formula for creating your credit score has never been released but it usually is the one of the key measures in determining whether or not a lender will even look at your loan application. It is also a key factor how car insurance companies grade your application.

How is bad credit relevant to car insurance?

Your credit score very likely has NO or very little relevance on the way you drive however car insurance companies are in the profit making business and their own studies show people with bad credit are more of a risk for paying premiums on time and generally more likely to file a claim. This argument makes sense however it certainly does not justify a 20 or 50% increase in bad credit car insurance rates. Bad credit certainly does not make you less of a driver

How do I improve my credit score?

Whether or not you need car insurance now improving your credit score is something every consumer should learn how to do. Its often reported that almost 30% of credit reports belonging to American consumers have errors – some small, some major. Many times simply disputing these errors with the credit bureau agencies will have the items removed. You should also try to keep your balance under 50% of your available limit.

“Percentage of Available Debt” is a high scoring factor so if you have a credit card with a $5,000 limit and owe $4,900 then think of a way to split this balance up or pay it down so the credit agency views you are not maxed out. Ironically, even if you pay your balance in full every month, carrying a balance close to your credit limit will almost always knock your score down.

You always use your turn signal before switching lanes, drive within the speed limit and yield to pedestrians in the crosswalk. Your driving record has been spotless since the day you got your license, and your hands are always planted firmly at 10:00 and 2:00. So why are your insurance premiums so high? Many people are baffled when they find out that they have to pay a rate that’s higher than the average for their car insurance. Your credit score could be driving up your car insurance premiums and costing your thousands of dollars in extra fees.

Why do car insurers care about credit scores?

Most people don’t understand what their credit score has to do with their ability to safely operate a motor vehicle. Your credit score has an impact on many facets of your life, from the type of job you can secure, to the cost of your home or vehicle, to the amount that you can borrow from banks. Car insurers also take these numbers into consideration. Your credit score gives the insurer a picture of your overall trustworthiness, likelihood of paying on time and chances of getting into an accident and filing a claim. The insurer uses your credit score as part of an overall picture of what it will cost the company to insure your vehicle. In the eyes of the insurer, applicants with lower scores are a higher risk, and therefore the company must take precautions to protect itself from loss.

So does my bad credit mean I will never get cheap car insurance?

Absolutely not. The beauty of the boom of the internet is that it has allowed customers to shop around for the best rates on everything from clothing to jewelry to car insurance. Gone are the days when only a few companies ruled the roost and could charge any rates they chose. Now the smart shopper has the pick of literally hundreds of companies competing for his business. With the economic downturn forcing many people into bankruptcy, foreclosure and unemployment, the scales are tipping in favor of the consumer, even the one with a less than stellar credit profile. To find the cheapest insurance for people with bad credit, simply put your ZIP code into our ZIP code search and compare car insurance quotes for FREE!

Bad Credit is Not the End of the World (Or the Road)

The credit score is only one factor that contributes to what you will pay in monthly insurance premiums. Your driving record, your age, your marital status, the make and model of your car, your neighborhood and even your scholastic abilities all play a role in the final rate you’re offered. Practice safe driving and avoid getting fines and tickets, and you will see your rate lower. In addition, many car insurance companies offer safe driver discounts as incentives for avoiding accidents. Take advantage of these discounts to lower your car insurance premiums.

Take Steps to Repair Your Credit

While you’re enjoying your car, make affirmative steps to repair problem credit so that you can get a lower rate down the line. The first step is to contact your creditors and try to work out a payment plan to eliminate and lower your debt as soon as possible. Even if you have to accept a higher rate in the beginning, you may be able to lower your payments as time passes and your credit improves. Get a copy of your credit scores from the three major credit bureaus—Equifax, TransUnion and Experian, and review them for errors. Pay off the debts with the lowest balances first, then work your way up to the higher balances. You can also try and find the best credit card for your situation. There are many websites that compare credit cards for FREE! Just a few points difference in your score could mean thousands of dollars in savings.

Negotiate for a Lower Rate

Shop around for the best rates, and contact the insurer to see if there are lower rates available. In some cases, you can get a lower rate if you bundle other policies—homeowners, life, business– with the same insurer. Find one that will be flexible in giving you the best rate for your money. Remember, you can compare car insurance companies for FREE by entering your ZIP code into our ZIP code search!

Ask Questions

While most insurers do use the credit score as a factor in determining your overall rate, it’s not the only factor in your final rate. Some insurers give less weight to it than others. Other factors such as your driving history, age and neighborhood might carry more weight than the credit score. While there is no guarantee that your insurer will reveal how they calculate their percentages, you can certainly find out if the credit score is a major determining factor. Ask your insurer how important the overall credit score is in calculating your final monthly premium.

Consider Your Car Choice

Did you know that car insurance rates are often lower for new cars? Many people are not aware that interest rates, car payments and insurance can be less for newer cars than for older cars. Insurers figure that newer cars have a smaller chance of being involved in a wreck, making it less costly to insure. In addition, some dishonest drivers may get frustrated with the ongoing costs of maintaining and older car and intentionally wreck it in order to file an insurance claim. All of these factors make it harder for honest drivers with credit problems to get low car insurance rates. Choosing a newer car may mean lower rates, even if your credit is less than perfect.

Don’t waste another day paying outrageous car insurance premiums. Contact us today to find out how much you can save every month. We realize that everyone struggles from time to time, and we’re eager to help you get your credit back on track. Get started now and drive those high premiums down today.

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