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The Accurate Insurance Guide to Getting the Best Car Insurance With a Bad Credit Score

Published on July 30th, 2020

The American credit system uses numerous factors to paint a picture of a person’s reliability. Unfortunately, life happens, and sometimes even the most responsible among us can’t avoid earning a sub-par credit score. When it comes time to insure yourself as a driver, you may find yourself looking for a cheap car insurance company nearby—only to find that your credit prohibits you from attaining affordable insurance options. At Accurate Insurance, we work hard to provide all customers with affordable insurance quotes in their area regardless of their credit history.

Will a Car Insurance Company Look at My Credit Score?

Almost all insurance companies take an applicant’s credit score into consideration when determining rates. In addition to reviewing your lending credit score, insurance companies may also review a second, separate score which is insurance-specific. This second score aggregates information that is used to estimate how likely it is that you will file a claim.

The practice of using credit to restrict insurance options is not uncontroversial. Some advocates argue that a poor credit score is unavoidable for those with a low income or who have struggled with job loss. When considering the practice from this perspective, it’s easy to imagine why someone with bad credit would also need affordable insurance the most. There are three states which outlaw the practice of insurers reviewing an applicant’s score: California, Hawaii, and Massachusetts.

What Factors Affect a Credit-Based Insurance Score?

Many of the factors which affect your credit-based insurance score are the same as your lending-oriented score. You are considered more likely to file an insurance claim if you:

  • Have a history of missing payments or making late payments.
  • Have a history that includes bankruptcy and/or foreclosure.
  • Have one or more accounts in a collections status.
  • Have recently applied for a loan or credit card.
  • Have a significant amount of debt.

How Much Will a Bad Credit Score Influence My Insurance Rate?

When you’re looking for a cheap car insurance company nearby, you may be wondering just how much your bad credit will affect your odds. The truth is that this score can make a significant impact on what’s presented to you by the insurer. Your credit score may not only influence your monthly payment, it could also drive up the amount of your down payment and limit other options within your agreement. At Accurate Insurance, we strive to find plans that work for people who have bad credit.

Improving Your Credit Score for Better Rates

It’s good to be skeptical of anyone promising a quick-fix for your credit score. While there are many different ways to make an impact on your score, it’s important to understand that these things take time. Spending time improving your credit score will help you secure better insurance opportunities in the future. Here are some tips:

  1. Take care of your bills as soon as possible. If you are having trouble making your payments, see if adjusting your budget will help you pay on time. Work with your creditors to resolve any outstanding balances before a debt collector gets involved.
  2. Avoid hard credit checks. The more hard credit checks you accumulate on your credit report (such as when applying for a new credit card), the more your score will be dinged.
  3. Never spend more than 25% of your available credit. It might seem counterintuitive that you should have the credit you don’t use, but this use percentage makes a big impact on your score. The thinking here is that the ratio of used to unused credit indicates a certain level of responsibleness.
  4. Work to manage your debt. If you are living in debt, you’re not alone—almost everyone living in the U.S. has some amount of debt to their name. If you are living with a significant burden of debt, avoid taking on any more while paying back what you owe. Getting out of debt is not easy, and may require careful budgeting, taking on a second job, or selling possessions you can live without.
  5. Check your score regularly. Through the Fair Credit Reporting Act, everyone is entitled to one free credit report from the three major credit bureaus (Equifax, Experian, and TransUnion). You can spread these checks out over the course of a year so that you are reviewing a new score every 4 months.

How Can I Save Money On My Insurance if I Have Bad Credit?

Is it even possible to save money on car insurance with bad credit? The answer is yes. Those who are working to improve their credit should expect to review more insurance quotes before making an agreement with an insurer. At Accurate Insurance, we work to help all of our clients find a cheap car insurance company nearby. We guarantee the lowest possible rate for all who apply. Looking for Love at First Quote®? Get started with Accurate Insurance today!

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