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How to Find The Best Auto Insurance For Your Credit Score

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Auto insurance for your credit score.
Auto insurance for your credit score. You might be in for a surprise!
Auto insurance for your credit score
Auto insurance for your credit score.

How a poor credit score can get in the way of finding the best car insurance: How to improve your auto insurance for your credit score. 

Insurers use different factors to determine car owners’ auto insurance rates. Each state has its own set of guidelines, but credit scores are commonly used to calculate car insurance premiums. If you’re not careful, a poor credit score can get in the way of finding the best car insurance.

You could have an excellent driving record with no accidents, but because of a low credit score, the cost of your car insurance might go through the roof. If your credit is lacking, you can use the tips below to find the best car insurance for your score.

First, let’s find out where you stand in terms of your credit score.

What is a Good Credit-Based Insurance Score?

An insurance credit score differs from a traditional FICO credit score. As such, just because you have an excellent FICO score, that doesn’t mean your insurance credit score will be as good or better.

In addition, companies usually have their own methods for checking credit. So, the scoring system will vary from one insurer to the next. But, this is an example of how an insurer’s scoring system might look:

  • Less desirable: Beneath 500
  • Below average: 501-625
  • Average: 626-725
  • Good: 776-997
  • Exceptional: 851 and up

If an insurance provider considers your credit score “bad” or “less desirable”, you’ll probably get higher rates on your car insurance premiums.

Auto insurance for your credit score.
Auto insurance for your credit score. You might be in for a surprise!

Finding Auto Insurance for Your Credit Score

1.     Choose an Insurer That Doesn’t Perform Credit Checks

One way to get around a poor credit issue is to find an insurer that doesn’t check credit. Many reputable companies do not use credit scores to determine insurance rates. For example, if you’re a car owner in The Lone Star State, you can get a quote from Dillo with no credit check.

So, search for a no-credit-check company nearby on Google, Bing, or another search engine. Then, you can pick and comb through the results to find your best car insurance match.

2.   Determine What Companies Offer the Best Rates With Poor Credit

If you still cannot find what you’re looking for, you can shop around for quotes from different insurance providers. You’ll probably get quoted different rates, so it should be easy for you to pick the insurance plan that best fits your budget.

For example, on average, drivers with poor credit can get Geico auto insurance for $1,748. Meanwhile, State Farm offers coverage to customers with good credit for $1,511. As for clients with poor credit ratings, State Farm insures them for around $3,114. So take the time to shop around to ensure you get the best deal.

3.     Is a Telematic-Based Rate a Good Fit?

For another way around credit checks, consider using a company that uses telematics to determine your car insurance premium rate. A smartphone app or in-car device will be required for this process. The tool will measure hard braking, rapid acceleration, mileage driven, and more. Then, the information is relayed to the insurance company, and your rates are adjusted as you go. 

If you’re a safe and courteous driver that drives the speed limit, a telematic-based rate could be a perfect fit.

4.     How About Pay-per-Mile Insurance?

Various companies offer pay-per-mile insurance. In these cases, carriers will keep track of your mileage via an app or device plugged into your vehicle’s diagnostic port. A company might go as far as to ask you to take a picture of your odometer once a month.

Mile Auto, an insurance provider, believes motorists who travel less than 10,000 miles annually will benefit the most from this coverage. Nationwide also offers Smartmiles policies to drivers traveling less than 8,000 miles per year. Likewise, you can also get pay-per-mile insurance from Metromile or Allstate.

Consider Improving Your Credit Score

If you want the very best deals for car insurance, consider improving your credit score. This feat may seem impossible, but you can improve your credit by paying bills on time, lowering or paying off credit card debt, and limiting hard credit inquiries.

Also, don’t worry if you’ve had your credit checked by an insurance agency lately. These companies do soft credit checks. In turn, they don’t impact your credit score, so you’re free to shop around for car insurance quotes without fearing your number dropping.

Other Factors Used to Determine Insurance Rates

What do insurers look at to determine your rates? Once again, that depends on the company itself. Your history of on-time payments, the total number of outstanding auto or other loans, and foreclosures or bankruptcies are all factors insurance companies examine. They also sometimes check your debt as a whole and how much of your credit card limits you’ve used to define your premiums.

Your gender, age, and driving history also play a significant role in how your car insurance premium is calculated. The insurer may even look at where you live, marital status, and what kind of vehicle you drive to. For instance, if you drive a luxury car, don’t be surprised by the high costs of your car insurance premiums. The same is true for male teenage drivers. 

All that said, there are certain states where auto insurance providers are barred from using credit scores to determine premium rates. Insurance companies in California, Hawaii, and Massachusetts are forbidden from using car owners’ credit score for rating auto policies. In these states, car owners’ credit score can’t be used for denying or canceling coverage as well.

The Bottom Line

If you want the best auto insurance for your credit score, you’ll have to do a little work to find the ultimate deal. But the minimal time and effort will be worth it in the long run. You’ll gain top-notch coverage at a budget-friendly rate.

However, keep in mind that if you want insurance that’s the best of the best, there’s more to it than just fixing a poor credit score.

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