Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Aug 6, 2021

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Key takeaways...

  • If you have a credit score below 500, expect to pay 25 to 75 percent more on car insurance than someone with a score of 650 or higher
  • There are other factors as well, like your driving record, your age, and where you live, that affect car insurance rates
  • No matter if you have a good or bad credit score, there are ways to improve your car insurance rates

The obvious answer is that your credit score in most cases does have an impact on your car insurance rates.

If you have a score well below 500, you can expect to pay 25 to 75 percent more on your car insurance premiums than someone with a credit score of 650 or higher.

It’s important that you maintain a good credit score, especially if you are considering comparing switching auto insurance companies. Unfortunately, many drivers pay more than they have to not realizing how much of an impact their credit history is having.

If you want to switch insurance companies, they will, no doubt, be looking at your credit score and factoring that into your pricing, along with:

If you’d like to get better and more affordable car insurance, enter your ZIP code above and compare at least three to four policies today!

How Can You Improve Your Credit Score and Lower Auto Insurance Rates?

To make sure you keep your credit score high, you can do a number of smart things each month.

Improving your credit history can go a long way to saving you money. It’s not just about cheap car insurance. You’ll get better rates on different loans and much more. Credit counseling has become increasingly popular. Consultations are often free allowing you a preview into what you’ll get out of it. The most important thing is to follow their instructions. Many companies can help you get certain negative records removed including late payments.

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No matter what your credit history, there are a few things you can do to steadily increase your credit scores:

  • Pay your credit card bills on time
  • Pay your other liabilities on a regular schedule
  • Set up autopay for whatever you can. This way, you won’t forget
  • Have at least three cards and a stable loan (like a car loan) open
  • Pay down credit card balances (30% utilization or less is best)
  • Don’t close old credit cards
  • Don’t apply for too many lines of credit at once
  • Stay with the same insurance company to avoid hard pulls
  • Check on your credit inquiries and social security number to make sure the information is accurate

All this costs you nothing beyond what you’re spending in general. If you can, spend responsibly enough to pay off your credit cards in full each month.

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How Else Can You Save Money on Your Auto Insurance Annual Premium?

If you’re looking to save money on your auto insurance, it’s smart to shop around every so often. Keep in mind, many insurance companies offer loyalty discounts. You’ll also get lower rates if insurers see you’ve stayed with the same insurer for longer.

In general, be responsible. This applies to your spending and credit. It also applies to your driving. Drive at a moderate speed, avoid hard braking or rapid acceleration, avoid late night driving, etc. All of this together could lead to much lower auto insurance rates for drivers.

Whether you have poor credit, a few tickets, or something else, you can always shop for auto insurance and get competitive rates. High risk drivers will have fewer options. But you can get a few quotes and see who offers the best price.

Make sure you’re also getting sufficient coverage, make sure you get all applicable discounts like student discounts or pay in full discounts, and check out company reviews. The auto insurance policy you end up with could be far cheaper than the one you start with, even if you have a poor insurance score overall. You don’t necessarily need an insurance agent or a minimal type of insurance. Auto insurers can be more flexible than you realize.

They look at your credit rating to see what kind of customer you might be. You can look at their reviews on sites like Yelp to see how they might handle monthly payments and an insurance claim. All this information together helps you make the right decision.

For one person, usage-based insurance might be the best deal. For another, a more traditional plan coupled with making payments on time and telematics driving programs could be the way to go. Some people drive safely with minimum coverage to cover basic liability. This is common with older cars that are too cheap to benefit from comprehensive coverage. Over time, as you develop excellent credit, you can also ask your insurance company to re-evaluate.

It all starts with getting quotes. You can see what different companies offer when you enter your ZIP code below and start comparison shopping today for better and more affordable car insurance! It’s important to be honest about your driving history. Insurance companies will pull your credit to verify your score before offering an auto insurance premium. Their offer is only as good as the information they have. Even with usage-based car insurance, your rates could change dramatically if you give the wrong information.

References:

  1. https://wallethub.com/edu/what-is-a-good-credit-score/24891/
  2. https://www.privacyguard.com/bad-credit-score-explained.html
  3. https://www.moneycrashers.com/factors-affect-car-insurance-rates/
  4. https://money.howstuffworks.com/personal-finance/auto-insurance/driving-record-affect-insurance-rate.htm
  5. https://www.thebalance.com/maintain-good-credit-score-960513
  6. https://www.credit.com/credit-repair/how-to-improve-credit-score/
  7. https://www.allstate.com/
  8. https://www.progressive.com/
  9. https://www.farmers.com/