Drivers with low or no credit scores can still find affordable car insurance. A recent analysis by The Zebra shows a significant price difference: those with poor credit (below 580) pay an average of $2,729 annually, while those with excellent credit (800+) pay $1,308 – a difference of 48%. This means credit-based insurance pricing can cost drivers over $1,400 per year.
States Where Credit Doesn’t Matter
Some states limit or prohibit the use of credit scores in car insurance. California, Michigan, and Massachusetts are among them, ensuring fairer rates for all drivers. If you live in one of these states, your insurance premiums won’t be affected by your credit history.
Insurers That Don’t Factor in Credit
For drivers in other states, several insurers offer policies that don’t rely on credit checks:
- Dillo Insurance (Texas only): This company doesn’t check credit and may cover drivers with poor records or coverage gaps.
- CURE Auto Insurance (Michigan, Pennsylvania, New Jersey): CURE focuses on driving history rather than credit, occupation, or education.
- Root Insurance: Root considers credit but prioritizes driving behavior, potentially offering lower rates to good drivers with imperfect credit.
Credit-Based Pricing: The Numbers
The Zebra’s data reveals the impact of credit on auto insurance costs:
- Poor (300-579): $2,729/year
- Average (580-669): $2,240/year
- Good (670-739): $1,841/year
- Excellent (740-799): $1,537/year
- Exceptional (800-850): $1,308/year
Even a moderate improvement in credit can lead to significant savings.
Improving Your Credit Score
If you want to improve your credit, focus on these steps:
- Pay bills on time.
- Reduce existing debt.
- Avoid opening too many new accounts at once.
- Keep older accounts open and active.
Beyond Credit: What Else Matters?
Choosing the right car insurance company requires more than just finding a no-credit-check policy. As Howard Goldberg, VP of Plymouth Rock Assurance, suggests, compare coverage limits and deductibles to get an accurate price comparison.
Key factors to consider:
- Customer service
- Claims handling
- State laws
- Coverage types
- Cost and value
- Financial stability
Talking to an independent insurance agent can help you navigate these options effectively. They can provide personalized guidance based on your needs and local regulations.
Bottom line: While credit-based pricing can significantly impact insurance rates, options exist for drivers seeking fair premiums. By researching insurers, comparing coverage, and understanding state laws, you can find a policy that fits your budget and driving profile.
