How to find Auto Insurance with Bad Credit
Having a bad credit score does not mean you cannot find cheap auto insurance. Here at Cheapest Auto Insurance, we offer drivers with bad credit affordable auto insurance with the coverage they need. This is a heavily debated issue on whether or not insurance companies should be allowed to use credit as a rating factor. Personally, I have never been a fan of it just because I don’t see the correlation between how people pay their bills and how they drive a vehicle. But my counterparts disagree, insurance companies who use credit as a rating factor say how people pay their bills shows a level of responsibility that can relate to how responsibly they will drive a car.
Many of your local and regional insurance companies they majority of the time do not use credit as a rating factor. We have found the ones that focus on credit are the more national companies. Homeowners insurance seems to be the primary sector that uses credit as a major factor compared to the other segments of insurance with auto insurance being the next.
We have found that customers with a credit score less than 600 are the most penalized when it comes to auto insurance prices. And in turn drivers with a credit score over 700 are among the most rewarded when it comes to finding cheap auto insurance. Bad credit can cost you up to 20% more on your auto insurance rates if you are getting a quote form a carrier that uses credit as a rating factor. Obviously if an insurance company does not use credit as a rating factor then there will be not impact on your monthly rates.
Ways to find cheap bad credit auto insurance
Cheapest Auto Insurance wants to help you find the cheap auto insurance you deserve even if you have bad credit. So here are a few tips we have found for you:
- Before getting an auto insurance quote ask them does the companies they write with us credit as a rating factor.
- Find out what your credit score is before researching auto insurance quotes so you can know if your credit is a help or a hindrance to your auto insurance rates.
- If your credit is bad, research and only get a quote from insurance companies who do not use credit as a rating factor.
Here is a list of some auto insurance companies who offer cheap auto insurance for drivers with bad credit in Oklahoma:
- Save Money Car Insurance
Here is a list of some auto insurance companies who offer cheap auto insurance for drivers with bad credit in Texas:
- Save Money Car Insurance
Keep in mind we are a local auto insurance company that writes business in Oklahoma and Texas only, so that is where we have done all of our comparisons at. But most all of our information can be relative no matter where you are located at. We did find out that there are 4 states that do not allow insurance companies to use credit as a rating factor and they are California, Hawaii, Massachusetts, and Washington.
How to find cheap auto insurance with good credit
The plus side is if you have good credit, you can be rewarded with discounts on your auto insurance up to at least 20% or more. And the one good thing is most auto insurance companies only look at credit on your policy at the initial sign up. So, if you start with an insurance company that runs credit and your credit is great you will keep that same rate even if down the road your credit score drops. We were not able to find any insurance companies that re run your credit on subsequent renewals. Here are a few auto insurance companies that have nice discounts for drivers with good credit:
- Liberty Mutual
One trend you will see here is these are all national companies which is what we mentioned above. Many of these companies also like to bundle your home or renters policy with the auto insurance policy for maximum discounts. This is very advantageous for the consumer to always try and bundle your policies with one company.
Why do auto insurance companies use credit as a rating factor?
Auto insurance companies use many different rating factors to set your auto insurance prices and your credit score is one of these major factors. Many companies use data points to predict the chances of a driver having an accident. This can work sometimes no doubt but there are situations that our out of a drivers control and their credit score has nothing to do with it. Let me give you an example of a driver that is driving the speed limit at night on a country road and a deer runs out in front of him and does $10,000 worth of damage, how is that related to a driver's credit score? It's just not! But the Federal Trade Commission concluded that drivers with poor credit scores file more claims than drivers with good credit. So, both sides have a valid argument.
Data also shows that Insureds with a bad credit history file a claim that claim is more expensive for the insurance company to pay out compared to a driver who has a good credit history. Which is why drivers with good credit history are rewarded with lower auto insurance premiums.
It is important to remember that auto insurance companies use a soft credit inquiry not a hard one. So, it should not affect your credit score by getting an auto insurance quote. For your auto insurance to be accurate it is important to fill your information on the quote accurately.
How the Future of Auto Insurance could remove credit score as a rating factor
Telematics based auto insurance companies could be putting an end to auto insurance companies using credit as a rating factor. Many new tech companies are coming to market and offering an APP or a device to put in your car to monitor your driving habits and likelihood to have an accident. Root insurance is a classic example that advertises a lot about their APP, they allow you to drive and monitor your driving habits then give you a quote. For safe drivers this is could be a good option for you but if you like to pump the brakes hard and drive fast your rates will be higher.
This is also a heavily debated issue due to consumers not being comfortable being tracked everywhere they go. And some wonder what exactly is being done with the data that is collected. But it does give financial relief for safe drivers who have bad credit because these companies reward these drivers for driving habits over credit score, which does make good sense.
How to save money on your auto insurance if your credit is bad
If your credit scores are hurting your auto insurance prices, we have found a few tips for you to help get those premiums down. Here are some discounts to ask you insurance company about that can help overcome the price increase from having bad credit:
- Have a clear driving record for at least 3 years to qualify for a safe driver discount
- Set your monthly payments on auto pay
- Sign up for paperless billing
- Try to bundle your home or renter's insurance with your auto insurance company
- File claims wisely-Insurance companies charge for any claim they pay our on your behalf no matter how much the cost is.
To touch a little further on our last point we made about filing claims wisely, Let's use an example of you back into a pole in a parking lot and do $1200 worth of damage to your car. You then pull your insurance policy and see you have a $1000 deductible (which is the part you are responsible for) so all you are receiving from the insurance company is a check for $200. But your monthly rate is going to be raised by $30 a month or the accident surcharge for 3 years, which is how long most auto insurance companies charge for. So doing the math you will be saving a lot of money by not turning this claim in.
Concluding thoughts on Bad Credit Car Insurance
The key thing to remember when shopping for auto insurance with bad credit is to get as many quotes as possible with insurance carriers who do not use credit as a rating factor. The more options you look at the better your chances are of finding cheap car insurance. And be sure and try to shop around on your renewal time. Auto insurance rates are changing all the time and new companies are coming to market that seem to be trying to come in lower than anyone else. Here at Cheapest Auto Insurance, we can provide you with cheap auto insurance whether you have bad credit or good credit. Call or text one of our licensed agents today to start saving money on your auto insurance rates!