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Finding the Best Auto Insurance Quotes for Drivers with Bad Credit


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Having a bad credit score can be a burden in many areas of your life, especially when trying to find the best insurance quotes. Unfortunately, a bad credit score will also affect your car insurance rates. The lower your credit score is, the higher your rates will be; people with bad credit typically pay about 20 percent more for their car insurance that those with good credit.

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How Insurers May Interpret Your Credit Score

Some insurers are getting aggressive about weeding out customers with bad credit—but why is that? Are they afraid these customers won't pay? Yes, insurance is something that is paid in installments, but it's not like they're lending a physical product. Nevertheless, the insurance company might argue that since they are underwriting a driver's risk, if they get paid in monthly premiums or other installmants, they have a right to the best customers with a decent credit history.

But that's only half of the story. Auto insurance companies are in the business of risk assessment. What some consumer advocates have found is that auto insurance companies are looking at some bad credit scores as reflecting the record of a "reckless driver." The tortured logic is that if someone is careless about their finances, they may also be careless on the road. This leap of logic is far from true in many cases, but that doesn't stop insurers from using a bad credit score to their advantage.

Shop Around

It is always in your best interest, when shopping for anything, to do your homework and shop around for the best price. Most of the major auto insurance companies will offer you a free quote online; take advantage of this free service by receiving free quotes from as many companies as possible. Each of these companies wants your business, so be sure to ask them if there's anything you can do to get a better quote. They may be able to offer you valuable tips on how to improve your rates over time.

Increase Your Deductible

Increasing the amount of your deductible can save you a lot of money each month. Call all of the major insurance companies and ask them if you would be able to increase your deductible and if not, ask what you can do to qualify for an increased deductible.

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Decrease Your Collision Insurance

Decreasing the amount of collision insurance on your policy is another way to get a lower insurance premium. This is a great way to save money, though it is a bit risky. With less collision insurance, you will have to pay more in the event of a car accident. You will need to weigh the benefits and drawbacks of decreased collision insurance for yourself.

Can You Improve Your Credit Score?

There is an easier way to gain a few extra points on your credit score. Each of the three major credit agencies—Equifax, Transunion and Experian—offer a service where you can order a detailed report of your credit history and receive advice on how to improve every negative point on your credit. For example, you may be carrying around a small debt from a long time ago that you weren't even aware of; if you can pay that debt, you will see a quick improvement in your credit score. In the long term, paying all of your bills on time will improve your credit score over time.

Getting the best auto insurance quotes with bad credit can be difficult. But if you shop around, do your research, and follow the advice offered in this article, you may be surprised at the rate you are able to get on your car insurance.

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