Auto Insurance

Cheap Car Insurance for Drivers With Bad Credit

Updated July 2026 5 min read 1,139 words

Shopping for cheap car insurance with bad credit feels like paying a tax on your financial history — and in most states, that is essentially what it is. Insurers use credit-based insurance scores to price policies, and drivers with poor credit typically pay 60% to 115% more than those with excellent credit for identical coverage. This guide covers which carriers weigh credit least, the states where the practice is banned outright, and specific steps to drop the premium in weeks rather than years.

How Bad Credit Actually Affects Your Auto Rate

Insurance companies do not use a FICO score directly. They pull a credit-based insurance score, a proprietary number that predicts claims frequency rather than loan default risk. LexisNexis and TransUnion sell these scores to most major carriers, and the correlation between poor credit and higher claims — established by federal studies in the mid-2000s — remains the industry's justification for the practice.

The financial hit is significant. Drivers with poor credit (typically below 580 on the traditional scale) often pay 60% to 115% more than those with excellent credit on the same policy. In several states, the bad-credit surcharge exceeds what the same insurer would charge for a single at-fault accident or a first DUI.

A 35-year-old with a clean driving record and a 550 credit score might pay around $2,400 a year for full coverage in Ohio, while an identical driver with a 780 score pays closer to $1,200 — same car, same ZIP code, same coverage limits. The gap widens further in states like Michigan and Louisiana, where base rates are already among the highest in the country.

Insurers Offering Cheap Car Insurance With Bad Credit

Not every carrier hits bad-credit drivers equally hard. State insurance filings show the following companies apply lighter credit-based surcharges than the national average:

USAA — the smallest gap between good- and bad-credit customers of any major insurer, though membership is limited to military members, veterans, and immediate family.
Nationwide — moderate credit weighting and often competitive for drivers in the mid-tier credit range.
American Family — smaller credit-based tier jumps compared with Allstate or GEICO in many Midwest states.
Root Insurance — bases pricing primarily on a driving behavior test through the app; credit affects a smaller portion of the final rate.
Erie Insurance — regional carrier in the Mid-Atlantic and Midwest with historically modest credit weighting.
Auto-Owners Insurance — Midwest and Southeast focus, less credit-sensitive than the national brands.

Progressive and GEICO advertise heavily to drivers with subprime credit, but they often still charge them substantially more than better-credit customers. The wide advertising net does not equal a discount. Running three or four side-by-side quotes matters more here than for any other driver profile — the gap between the cheapest and most expensive quote for a bad-credit driver routinely exceeds $1,000 a year.

States That Ban or Restrict Credit-Based Insurance Scoring

A handful of states prohibit insurers from using credit to price personal auto policies:

California — Proposition 103 bans credit as a rating factor.
Hawaii — credit prohibited entirely from auto insurance rating.
Massachusetts — regulators disallow credit-based pricing.
Michigan — banned in 2020 as part of the state's no-fault reform.
Washington — passed a temporary emergency ban in 2021, later replaced with narrower restrictions on how credit can be used.

If you live in one of these states, a credit-based insurance score does not factor into the quote. Drivers in the other 45 states plus D.C. deal with credit as an active pricing lever. A few other states — Maryland among them — restrict how insurers can use credit at renewal, meaning a rate cannot be raised mid-policy solely because a score dropped. Rules change; if a state legislature is currently debating credit-based scoring, the state insurance department website is the fastest source of truth.

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Six Fast Ways to Cut the Premium Now

When credit will take months or years to move meaningfully, these levers work immediately. The fastest path to cheap car insurance with bad credit is usually not fixing the score — it is stacking every discount and structural change that applies today:

Shop at least five carriers. Rate variation for identical coverage often exceeds 50% between the cheapest and most expensive quote for the same driver profile. Independent agents and online comparison tools both work; the point is volume of quotes.
Enroll in a telematics program. Progressive Snapshot, State Farm Drive Safe & Save, and Allstate Drivewise can shave 10% to 40% off the rate for drivers who log under 12,000 miles a year and avoid hard-braking.
Raise the deductible from $500 to $1,000. On full coverage this typically drops the premium 8% to 15%. Skip this on cars worth less than $4,000.
Bundle renters or homeowners. Even a $180-a-year renters policy can trigger a multi-policy discount worth $200 to $400 on the auto side.
Pay in full or set up automatic payments. Paid-in-full discounts run 5% to 10% at most major carriers; auto-pay adds another 3% to 5% and eliminates monthly installment fees.
Drop collision on older cars. If the annual premium plus the deductible approaches half the car's value, collision coverage stops making math sense.

Non-Standard Insurers: When Traditional Carriers Say No

Drivers with severe credit issues combined with a DUI, multiple accidents, or a coverage lapse sometimes get declined by mainstream carriers altogether. Non-standard insurers specialize in this market — Dairyland, Direct Auto, GAINSCO, National General, The General, and Bristol West all target high-risk drivers who cannot qualify at a preferred carrier.

Two things to understand about non-standard coverage before signing:

Premiums are almost always higher than what a standard carrier would quote a clean driver, but they are often the only path to legal, active coverage when standard markets refuse to write a policy.
The policies frequently come with restrictions — lower default liability limits, fewer add-on options for rental reimbursement or roadside, and installment fees that can add $60 to $120 per year on top of the base premium.

Progressive operates in both standard and non-standard markets, which is one reason it is frequently the cheapest option for drivers with poor credit paired with a marginal driving record. The Progressive quote engine shops across its own underwriting tiers automatically, so a driver who would not qualify for the preferred rate might still get a workable number through the same brand.

What 'Bad Credit' Means to an Auto Insurer

The credit-based insurance score used by most carriers runs on a different scale than the familiar FICO range. The widely used LexisNexis Attract Auto model sits on a 200-to-997 scale, where anything under about 580 is generally considered 'poor' or 'non-standard' and anything above 776 is 'preferred.' Payment history and outstanding revolving balances drive most of the score, but hard inquiries, thin files, and short credit history all pull the number down.

An insurance credit pull is a soft inquiry — it does not affect a traditional credit report or FICO score. Insurers can rerate at renewal in most states, so a credit rebound from 540 to 640 during a policy year may lower next year's premium with no other change to the driving profile.

Realistically, moving a bad credit-based insurance score up to 'average' takes 6 to 18 months of on-time payments plus paying down revolving balances below 30% utilization. Closing old accounts, opening several new cards at once, or missing a payment during the rebuild resets the clock. Once the score improves, requesting a mid-term re-rate at the current carrier is worth a five-minute phone call — some insurers will honor it without waiting for the renewal date.

Frequently Asked Questions

How much more does bad credit cost on car insurance?

Drivers with poor credit typically pay 60% to 115% more than drivers with excellent credit for identical coverage in states that allow credit-based rating. On a policy that would cost $1,200 a year at excellent credit, that means roughly $1,900 to $2,600 with poor credit. The exact surcharge varies by state, carrier, and the rest of the driving profile.

Which car insurance company is cheapest for bad credit?

There is no single cheapest carrier for every bad-credit driver, but USAA (for eligible military families), Nationwide, American Family, and Root tend to apply lighter credit surcharges than the national average. Progressive is often competitive because it shops across its own standard and non-standard tiers. Getting five quotes is more effective than picking one brand upfront.

Can I get car insurance with a 500 credit score?

Yes. Insurers do not decline coverage based on credit alone — they price it higher. A 500 score usually places a driver in a non-standard tier, where premiums are elevated but coverage is still readily available through carriers like Dairyland, The General, National General, or Progressive's non-standard tier. Comparing at least three quotes is essential because pricing varies widely at this credit level.

How long does it take for better credit to lower my insurance rate?

Most carriers re-check the credit-based insurance score at each renewal, typically every six or twelve months. Meaningful score improvements from consistent on-time payments and lower credit utilization show up within 6 to 18 months. Some insurers allow a mid-term re-rate on request when the score has jumped by a full tier, so calling the carrier after a big improvement is worth the effort.

Are there car insurance companies that don't check credit?

Insurers in California, Hawaii, Massachusetts, and Michigan cannot use credit as a rating factor. Outside those states, a small number of regional and non-standard carriers de-emphasize credit but almost all still pull an insurance score at quote time. Drivers looking to avoid credit-based rating entirely have the most success living in a banned state or buying from a usage-based insurer like Root, where driving behavior drives most of the price.