Best Car Insurance for Bad Credit: Save Money Even with Poor Credit in 2025

Introduction

If you’ve checked your credit score recently and cringed, you’re not alone, and you definitely don’t need to sell your car and start walking everywhere. Here’s the reality: drivers with bad credit pay an average of 118% more for full coverage car insurance than those with excellent credit. That’s more than double.

But here’s the good news: bad credit doesn’t disqualify you from affordable coverage. With the right insurer, strategic discounts, and smart shopping tactics, you can dramatically reduce what you pay, sometimes by 30-40%. This guide reveals exactly which companies offer the best rates for drivers with poor credit, plus actionable strategies to lower your premiums starting today.

Why Your Credit Score Affects Car Insurance Rates

Insurance companies aren’t checking your credit to be nosy; they’re assessing risk. According to Federal Trade Commission studies, drivers with lower credit scores statistically file more insurance claims than those with better credit. To compensate for this perceived risk, most insurers charge higher premiums.

Understanding Credit-Based Insurance Scores

Your car insurance rate isn’t based on your regular FICO credit score; it uses a credit-based insurance score. While similar, this score focuses on:

• Payment history (40%) – Your track record of on-time payments
• Current debt level (30%) – How much you owe versus your limits
• Length of credit history (15%) – How long you’ve had credit accounts
• New credit inquiries (10%) – Recent applications for credit
• Credit mix (5%) – Variety of credit types you manage

Key Insight: LexisNexis assigns insurance scores from 200 to 997. A score of 770+ gets you the best rates, while scores below 500 often result in significantly higher premiums or coverage denials.

Which States Prohibit Credit Checks?

Good news: if you live in these states, insurers cannot use your credit score to determine rates:

• California
• Hawaii
• Massachusetts

Additionally, Maryland, Michigan, Nevada, Oregon, and Utah restrict how insurers can use credit information, though they may still consider it for initial pricing.

The 6 Best Car Insurance Companies for Bad Credit in 2025

After analyzing rates, coverage options, and customer satisfaction across major insurers, here are the top picks for drivers with poor credit:

1. Geico – Best for Overall Affordability

Why Choose Geico: Consistently offers the lowest average rates for drivers with bad credit across most states.

Key Benefits:

• Safe driving discount: Up to 22% off after five accident-free years
• Multi-vehicle discount: Save 25% by insuring multiple cars
• 16 total discounts, including military, federal employee, and autopay options
• Available nationwide in all 50 states

Average Annual Rate for Poor Credit: Significantly below industry average (varies by state)

Potential Savings: Combine multiple discounts to reduce premiums by 35-40%

Limitations: Below-average customer service ratings in J.D. Power surveys; limited physical branch locations

2. Nationwide – Best for Usage-Based Savings

Why Choose Nationwide: Perfect if you’re a safe driver or drive infrequently.

Key Benefits:

• SmartRide program: Earn up to 40% discount based on safe driving habits—the highest telematics discount among major insurers
• SmartMiles pay-per-mile: Save up to 30% if you drive under 13,000 miles annually
• 10% participation discount just for enrolling in SmartRide
• Free annual policy review to maximize discounts

Average Annual Rate for Poor Credit: $2,606

Best For: Drivers who work from home, retirees, or anyone with a short commute

Available: 46 states (excludes Alaska, Hawaii, Louisiana, Massachusetts)

3. State Farm – Best for High-Risk Drivers

Why Choose State Farm: Offers specialized support for drivers with suspended licenses and violations.

Key Benefits:

• SR-22 assistance: Agents help file required proof of insurance for license reinstatement
• Drive Safe & Save™ and Steer Clear® programs reward good driving
• Discounts for defensive driving courses
• Three years violation/accident-free earns significant savings
• Multi-vehicle and bundling discounts available

Why It Matters: If your bad credit comes alongside driving violations, State Farm provides more flexible underwriting and support services.

Available: All 50 states

4. Amica – Best Discount Selection

Why Choose Amica: Offers rates 30% below the industry average for poor credit drivers, plus 18 different discounts.

Key Benefits:

• Bundling discount: Up to 30% off when combining home/renters with auto insurance
• High customer satisfaction: Ranked #1 in J.D. Power’s Auto Claims Satisfaction Study
• Homeowner discount even if you have renters insurance elsewhere
• Safety feature discounts for electronic stability control
• Some states offer policyholder dividends

Average Annual Rate for Poor Credit: $2,861

Limitation: Rates for other driver categories tend to be higher than average

Available: All states except Hawaii

5. First Acceptance – Best for Multiple Violations

Why Choose First Acceptance: Specializes in high-risk drivers who struggle to find coverage elsewhere.

Key Benefits:

• Insures drivers with bad credit, speeding tickets, DUIs, and accidents
• SR-22 certificates available
• Flexible payment schedules
• Decades of experience with high-risk underwriting since 1969

Best For: Drivers who’ve been denied coverage by standard insurers

Limitation: Higher complaint volume; limited endorsement options; not available in all states

Available: 14 states including Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Mississippi, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia

6. Cure (Citizens United Reciprocal Exchange) – Best for No Credit Check

Why Choose Cure: Rare among insurers, it doesn’t use credit scores, education, or occupation to determine rates.

Key Benefits:

• Zero credit check policy
• 24/7 roadside assistance included
• Services include fuel delivery, jump-starts, locksmith, tire changes, and towing
• Rates based purely on driving record and vehicle factors

Limitation: Currently available in only a few select states

Best For: Drivers who want their rates determined solely by their driving ability

Quick Comparison Table: Top Insurers for Bad Credit

8 Proven Ways to Lower Car Insurance with Bad Credit

1. Compare Quotes from 5+ Companies

Each insurer uses different underwriting criteria. One company might heavily penalize your credit, while another focuses more on your driving record. Always get quotes from at least five insurers; you could find rate differences of 50% or more for identical coverage.

Action Step: Get quotes from Geico, Nationwide, State Farm, Progressive, and one local/regional insurer in your area.

2. Maximize Available Discounts

Stack multiple discounts to offset credit-related rate increases:

• Bundling: Combine auto with home/renters insurance (save 15-30%)
• Safe driver: Maintain a clean record (save up to 22%)
• Defensive driving course: Complete approved courses (save 5-15%)
• Paperless billing: Switch to electronic statements (save 2-5%)
• Autopay: Set up automatic payments (save 3-7%)
• Multi-vehicle: Insure multiple cars on one policy (save up to 25%)
• Loyalty: Stay with the same insurer for years (save 5-10%)
• Safety features: Anti-theft devices, airbags, ABS (save 5-25%)

Pro Tip: Don’t assume you’re getting all available discounts. Call your insurer annually to review your policy Many customers miss discounts simply because they never asked.

3. Consider Usage-Based or Telematics Programs

If you’re a safe driver, let your habits speak louder than your credit score:

• Nationwide SmartRide: Up to 40% discount
• Progressive Snapshot: Up to 30% discount
• State Farm Drive Safe & Save: Up to 30% discount
• Geico DriveEasy: Up to 25% discount
• Allstate Drivewise: Up to 40% discount

These programs monitor factors like:

• Speed and acceleration
• Hard braking frequency
• Time of day you drive
• Total miles driven

Reality Check: You typically get a 5-10% participation discount just for enrolling, even before proving you’re a safe driver.

4. Raise Your Deductible Strategically

Increasing your deductible from $500 to $1,000 can lower premiums by 15-30%. However, make sure you have enough savings to cover the higher out-of-pocket cost if you file a claim.

Smart Approach: Calculate your annual savings and set aside that money specifically for potential deductible costs.

5. Review and Adjust Coverage Annually

If you’re driving an older vehicle (10+ years), consider dropping collision and comprehensive coverage. The rule of thumb: if your car’s value is less than 10 times your annual premium for these coverages, you’re likely paying more in premiums than you’d receive in a claim.

Example: If comprehensive and collision cost $800/year and your car is worth $6,000, it might be worth keeping. If your car’s worth $2,000, drop the coverage and save that $800.

6. Improve Your Credit Score Over Time

While you need coverage now, improving your credit will significantly reduce future premiums:

• Pay all bills on time (set up automatic payments)
• Keep credit utilization below 30% of available limits
• Don’t close old credit accounts (length of history matters)
• Dispute errors on credit reports from Experian, Equifax, and TransUnion
• Avoid new credit inquiries before shopping for insurance

Timeline: Most insurers review credit scores at renewal (every 6-12 months), so improvements can reduce your rate relatively quickly.

7. Choose Pay-Per-Mile Insurance

If you drive less than 10,000 miles annually, pay-per-mile programs can save 30-40%:

• Nationwide SmartMiles: Low base rate + per-mile charge
• Allstate Milewise: Similar structure
• Metromile: Specialized pay-per-mile insurer (select states)

Best For: Remote workers, retirees, urban dwellers with good public transit, or households with multiple vehicles where one is rarely driven.

8. Work with an Independent Agent

Independent agents represent multiple carriers and can shop your policy across 10+ companies simultaneously. They often know which insurers are most lenient with credit issues and can find coverage you’d miss shopping online alone.

Bonus: They can help identify obscure discounts specific to your profession, memberships, or vehicle features.

Critical Mistakes to Avoid When Shopping for Insurance with Bad Credit

1. Only Getting One Quote

The Problem: You might be paying 50-100% more than necessary.

The Solution: Compare at least 5 quotes. Online comparison tools make this take less than 15 minutes.

2. Choosing Minimum Coverage to Save Money

The Problem: While state minimum coverage is cheaper upfront, it leaves you financially exposed. If you cause a serious accident, you could be personally liable for tens of thousands in damages.

The Solution: Calculate appropriate liability limits based on your assets. Most experts recommend at least 100/300/100 coverage ($100k per person injury, $300k per accident injury, and $100k property damage).

3. Not Asking About Discounts

The Problem: Insurers won’t automatically apply all discounts you qualify for—you must request them.

The Solution: Specifically ask about every discount listed in this article when getting quotes.

4. Letting Your Policy Lapse

The Problem: Even a one-day coverage gap can label you as high-risk, resulting in 30-50% higher rates and potential license suspension.

The Solution: If you’re struggling with payments, call your insurer about payment plans before canceling. Some states also offer low-cost state programs for qualifying drivers.

5. Filing Small Claims

The Problem: Multiple claims increase your rates more than bad credit alone.

The Solution: For minor incidents (under $1,000-$1,500), consider paying out-of-pocket to preserve your claims-free discount. Always file for accidents involving other parties or injuries.

6. Ignoring Credit Report Errors

The Problem: Credit report errors are surprisingly common 25% of consumers have mistakes that could affect their scores.

The Solution: Request free annual reports from all three bureaus (Experian, Equifax, and TransUnion) at AnnualCreditReport.com and dispute any inaccuracies immediately.

Alternative Coverage Options for Bad Credit Drivers

Usage-Based Insurance (UBI)

Companies like Root Insurance and the programs mentioned earlier determine rates primarily based on your actual driving behavior rather than credit. This approach can neutralize credit penalties if you’re a safe driver.

How It Works:

• Install a telematics device or mobile app
• Drive normally for 2-4 weeks (trial period)
• Receive rate based on your driving data
• Continue monitoring for ongoing discounts

Tracked Factors:

• Mileage
• Speed
• Acceleration patterns
• Braking habits
• Time of day driving
• Phone use while driving (for some apps)

Non-Owner Car Insurance

If you don’t own a vehicle but occasionally drive borrowed or rental cars, non-owner policies provide liability coverage at significantly lower rates. Companies like Dairyland and Geico offer this specialized coverage.

Best For:

• Frequent car borrowers
• Rental car users
• Drivers maintaining continuous coverage after selling a vehicle
• License reinstatement requirements (SR-22)

Average Cost: $200-$500 annually (much less than standard policies)

State-Assigned Risk Plans

If you’re denied coverage by standard insurers, every state offers an assigned risk plan (sometimes called a “shared market” program) that guarantees you can get insurance, though at higher rates.

How It Works:

• Apply through a licensed agent
• The state assigns you to an insurer
• Receive legal minimum coverage
• Costs 25-50% more than standard high-risk policies

Note: These should be your last resort; exhaust all standard market options first.

Understanding the True Cost: What Bad Credit Drivers Actually Pay

According to 2025 data, here’s what drivers pay on average based on credit scores:

Source: Bankrate 2025 insurance rate analysis

Reality Check: A driver with very poor credit pays over $1,450 more annually than someone with excellent credit for identical coverage. Over a 10-year period, that’s $14,500 in additional costs, which is why addressing this issue matters so much.

Taking Action: Your Next Steps

The insurance market is competitive, and rates change constantly. Here’s your action plan:

Immediate Actions (This Week)

1. Get 5+ quotes using online comparison tools or an independent agent
2. Review your current policy for unused discounts
3. Check your credit report for errors at AnnualCreditReport.com
4. Ask about telematics programs if you’re a safe driver

Short-Term Actions (This Month)

1. Complete a defensive driving course (often available online for $20-50)
2. Consider bundling home/renters insurance with auto
3. Raise your deductible if you have adequate emergency savings
4. Set up automatic payments to ensure no lapses

Long-Term Actions (Next 6-12 Months)

1. Improve your credit score through consistent on-time payments
2. Maintain a clean driving record to maximize discounts
3. Re-shop your insurance annually at renewal time
4. Review coverage needs as your vehicle ages

Important: Don’t wait until renewal to switch insurers. You can change companies anytime, and most will prorate your current policy for a refund.

Frequently Asked Questions

Can I get car insurance with no credit history?

Yes, though you’ll likely pay similar rates to someone with bad credit. Insurers view no credit history as a similar risk to poor credit because they lack data to assess you. Consider insurers like Cure that don’t check credit or focus on usage-based programs where your driving matters more.

Will shopping for car insurance hurt my credit score?

No. Insurance companies perform soft credit inquiries that don’t affect your credit score and aren’t visible to other lenders. You can get unlimited quotes without any credit impact.

How often do insurance companies check my credit?

Most insurers review your credit at renewal (every 6 or 12 months). Some may check it mid-term if you make major policy changes. This means credit improvements can lower your rate relatively quickly within 6-12 months.

Is it better to pay insurance monthly or annually?

Annual or semi-annual payments typically save 5-10% compared to monthly installments. However, if paying monthly helps you budget better and avoid late payments, the convenience may be worth the small surcharge.

Can bankruptcy affect my car insurance rates?

Yes, bankruptcy appears on your credit report and can increase insurance rates for 7-10 years. However, as time passes and you rebuild credit, the impact diminishes. Some states prohibit insurers from using bankruptcy alone as a rating factor.

What’s the minimum car insurance required by law?

Minimum coverage varies by state but typically includes liability insurance for bodily injury and property damage. Most states require at least $25,000/$50,000/$25,000, though this is often insufficient for serious accidents. New Hampshire and Virginia are the only states without mandatory insurance requirements (though Virginia charges an uninsured motorist fee).

Should I tell my insurance company if my credit improves?

Absolutely. While most insurers automatically re-check your credit at renewal, you can request a re-evaluation anytime if your score has improved significantly (50+ points). Some insurers will adjust your rate mid-term.

What happens if I let my car insurance lapse?

Coverage gaps create serious problems:

• 30-50% rate increases when you reapply
• Potential license suspension
• Vehicle registration suspension in some states
• SR-22 requirement in certain situations
• Difficulty getting coverage from preferred insurers

If you’re struggling with payments, contact your insurer about payment plans before canceling.

Do all insurance companies weigh credit the same way?

No. Each insurer has proprietary algorithms determining how much weight they give credit scores versus other factors. This is why comparison shopping is so crucial; one company might heavily penalize your credit while another focuses more on your driving record.

Can I negotiate my car insurance rate?

While you can’t negotiate like buying a car, you can:

• Ask your agent to identify additional discounts
• Request a policy review to eliminate unnecessary coverage
• Mention competitor quotes and ask if they can match or beat them
• Inquire about upcoming discounts you’ll qualify for soon

Are online-only insurance companies cheaper for bad credit?

Not necessarily. Companies like Geico and Progressive are online-friendly but still check credit. What matters more is each insurer’s underwriting philosophy; some weigh credit heavily, while others focus more on driving history. Always compare both online and traditional insurers.

Final Thoughts: Bad Credit Doesn’t Mean You’re Stuck

Yes, bad credit makes car insurance more expensive; there’s no way around that reality in most states. But it’s not a life sentence. By choosing the right insurer, maximizing discounts, considering usage-based programs, and working to improve your credit, you can dramatically reduce what you pay.

The most expensive mistake is assuming you’re stuck with your current rate and doing nothing. Insurance is one of the most competitive industries in America, with companies constantly adjusting their underwriting criteria and fighting for customers. That competition works in your favor but only if you actively shop around.

The bottom line: Drivers with bad credit who follow the strategies in this guide typically save $500-$1,200 annually compared to those who stick with their first quote. That’s real money that can help you rebuild your financial foundation.

Take action today. Your future self (and your wallet) will thank you.

Ready to find affordable coverage? Compare quotes from top insurers now and start saving even with bad credit. Rates change daily, so see what you qualify for today.

This article is for informational purposes only and does not constitute financial advice. Insurance rates vary based on numerous factors, including location, driving history, vehicle type, and coverage levels. Always compare multiple quotes and read policy terms carefully before purchasing insurance.