When my cousin lost her job a few years ago, she struggled to keep up with bills, and her credit score took a hit. Once she got back on her feet, she started rebuilding her finances, but one thing still shocked her—her car insurance rates skyrocketed.

She called me in frustration and said, “Why is my car insurance so expensive just because of my credit score?”

I didn’t have an answer, but I was determined to find a way to help her get cheaper insurance—and what I learned saved her over $500 per year.

If you have bad credit and need affordable car insurance, you’re not alone. Here’s why your credit score affects your insurance rate and, more importantly, how you can lower your premium even if your credit isn’t great.

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Why Does Bad Credit Affect Car Insurance Rates?

Many people don’t realize that insurance companies check your credit score when calculating your rate.

📉 Low credit score = Higher insurance premiums

Why? Because insurers believe people with poor credit are more likely to file claims.

Here’s how credit affects car insurance rates:

Credit Score	Average Monthly Car Insurance Cost
Excellent (750+)	$120 – $150
Good (700 – 749)	$140 – $180
Fair (650 – 699)	$160 – $210
Poor (600 – 649)	$200 – $280
Very Poor (Below 600)	$250 – $350

If your credit score is below 650, you’re probably paying significantly more than someone with good credit.

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How to Get Cheap Car Insurance with Bad Credit

Even if your credit score isn’t great, there are still ways to save. Here’s what worked for my cousin—and how you can lower your car insurance premium today.

✅ 1. Compare Quotes from Multiple Providers

💰 Savings: Up to $800 per year

• Some insurance companies weigh credit scores less heavily than others.
• Use a comparison tool like Ocho.co to check multiple companies at once.
• Best companies for bad credit: The General, Progressive, GEICO, and Nationwide.

✅ 2. Look for Insurance Companies That Don’t Use Credit Scores

💰 Savings: Varies

• Some states ban insurers from using credit scores, including California, Hawaii, and Massachusetts.
• Some companies offer policies that don’t check credit, such as Dairyland and National General.

✅ 3. Opt for a Usage-Based Insurance Plan

💰 Savings: 10-30%

• If you drive safely, companies like Progressive (Snapshot®) and GEICO (DriveEasy™) offer discounts based on driving habits instead of credit scores.

✅ 4. Increase Your Deductible

💰 Savings: $100 – $500 per year

• Raising your deductible from $500 to $1,000 can lower your monthly premium.
• Only do this if you can afford the higher out-of-pocket cost in case of a claim.

✅ 5. Choose Liability-Only Coverage If You Have an Older Car

💰 Savings: 40-60%

• Full coverage isn’t always necessary for older vehicles.
• If your car is worth less than $3,000, liability-only insurance can significantly reduce costs.

✅ 6. Take Advantage of Discounts

💰 Savings: Up to 30%
Many insurers offer discounts that can help offset a higher rate due to bad credit:
✔ Multi-policy discount – Bundle auto and renters/home insurance.
✔ Good driver discount – No accidents or tickets in the past 3-5 years.
✔ Low mileage discount – Drive under 10,000 miles per year.
✔ Paperless billing & autopay – Many insurers offer small discounts for electronic billing.

✅ 7. Get a Co-Signer or Be Added to Someone Else’s Policy

💰 Savings: Up to 50%

• If you live with family, being added to a relative’s policy with good credit can drastically lower your rate.
• This worked for my cousin—she saved $700 per year by joining her brother’s policy.

✅ 8. Improve Your Credit Score Over Time

💰 Savings: Varies, but can be HUGE

• Even raising your credit score by 50 points could lower your insurance premium.
• Focus on paying bills on time and reducing credit card balances.

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Best Car Insurance Companies for Drivers with Bad Credit

Some companies charge more for bad credit, while others offer more affordable options. Here are the best insurers for cheap car insurance with bad credit:

1. The General

✔ Best for: High-risk drivers and those with poor credit.
✔ Flexible payment plans and no credit check in some states.

2. Progressive

✔ Best for: Drivers who can use Snapshot® to lower rates.
✔ Offers usage-based discounts, which can help if your credit is low.

3. GEICO

✔ Best for: Drivers who want a big-name company with competitive rates.
✔ Offers multi-policy and safe driving discounts.

4. Nationwide

✔ Best for: Those looking for personalized service and custom coverage.
✔ Discounts for bundling and defensive driving courses.

5. State Farm

✔ Best for: Drivers with bad credit but a clean driving record.
✔ Offers accident forgiveness and multi-policy discounts.

If your credit is low, compare quotes from these companies to find the cheapest rates.

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Final Thoughts: How My Cousin Saved Over $500 on Car Insurance

When my cousin first got a new car insurance quote, she was shocked at how expensive it was due to her low credit score. But after doing some research, she was able to cut her insurance costs by more than 50%!

Here’s what worked for her:
✔ Compared quotes from multiple providers (GEICO, The General, Progressive).
✔ Switched to a liability-only policy (since her car was older).
✔ Joined her brother’s insurance policy to take advantage of his better credit.
✔ Signed up for a safe driver program (Progressive Snapshot®) to lower her rate.

After applying these simple changes, her monthly payment dropped from $230 to $115—a $500+ savings per year!

If you have bad credit and need cheap car insurance, don’t settle for high rates. Compare multiple quotes, ask about discounts, and explore alternative options—you could save hundreds per year! 🚗💰

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Common Questions About Bad Credit & Car Insurance

🔹 Which states do NOT allow credit scores to affect car insurance rates?
✔ California, Hawaii, Massachusetts, and Michigan prohibit insurers from using credit scores.

🔹 What’s the best car insurance company for someone with bad credit?
✔ The General, Progressive, and GEICO tend to offer better rates for drivers with poor credit.

🔹 Can improving my credit score lower my car insurance rate?
✔ Yes! Even a small credit increase (50-100 points) can help lower your premium.

🔹 Does paying monthly instead of annually cost more?
✔ Yes! Paying in full can save you 5-10% compared to monthly payments.

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If you have bad credit and need affordable car insurance, take 5 minutes today to compare rates. You could be overpaying without realizing it—and with the right changes, you can start saving today! 🚗💡