How to Lower Your Car Insurance When You Have Bad Credit

Updated September 17, 2026

The information below is general educational content drawn from public industry sources. Specific rate impacts vary by state, by carrier, by individual driving history, and by the rate factors filed and approved with each state Department of Insurance. The ranges and patterns in this article are industry estimates, not GoAuto rating factors. For an accurate quote, contact GoAuto directly.

There is no minimum credit score to buy car insurance. In most states insurers may use a credit-based insurance score as one of several factors when pricing a policy, and the score they use is a different number from the one on your banking app. This guide is about what you can do about it: how the score works, how to improve it, which insurers weigh it least, and the rights federal and state law give you when credit raises your price. For the full breakdown of what poor credit costs and how the gap varies by state, see our companion guide to what bad credit costs by state.

Key Takeaways

There is no minimum credit score to buy car insurance. Credit is one of several rating factors, not a pass or fail test.

A credit-based insurance score is a different number from your FICO or VantageScore. It predicts claims rather than repayment, and payment history plus balances drive about 70 percent of it, so on-time payments and lower balances do most of the work.

California, Hawaii, Massachusetts, and Michigan do not allow credit-based insurance scoring in auto insurance at all. Washington allows it with restrictions, after a 2021 ban rule was invalidated in court.

Quoting uses a soft inquiry rather than a hard credit pull, so comparing quotes never touches your credit score.

Federal law entitles you to written notice and a free credit report when credit raises your premium, and many states let you request an exception when an extraordinary life event damaged your credit.

Can You Get Car Insurance With Bad Credit?

Yes. There is no credit-score cutoff for car insurance the way a lender applies one to a loan. Credit is one factor in a list. The Insurance Information Institute lists eight things insurers weigh when pricing a policy: driving record, how much you use your car, location, age, gender, vehicle, credit, and the coverage you buy. For many drivers, the driving record moves the price harder.

Where credit is permitted, it can affect more than the headline price, influencing which company within an insurance group writes you and which pricing tier you land in. The National Association of Insurance Commissioners is direct about the limit: an insurer “can only use your credit-based insurance score as one factor in its underwriting process,” and some states cap what credit alone can do. Washington states that insurers “cannot use your credit history by itself to deny you coverage or cancel your policy.” Weak credit generally raises what you are quoted rather than acting as a gate, but eligibility and pricing still depend on the carrier’s rules, your state, and the rest of your record.

How a Credit-Based Insurance Score Differs From Your Credit Score

This is the most misunderstood part of the topic. As the NAIC puts it, “Your credit-based insurance score is not the same as your regular credit score.” The two draw on overlapping information but answer different questions. A credit score estimates whether you will repay a debt. A credit-based insurance score, in the III’s words, “is a statistical tool that predicts the likelihood of your filing a claim and the likely cost of that claim.”

Its ingredients, per the NAIC’s breakdown of FICO’s weighting, are payment history (40 percent), outstanding debt (30 percent), length of credit history (15 percent), pursuit of new credit (10 percent), and credit mix (5 percent). What it cannot include matters just as much: the NAIC states the score “cannot use any personal information to determine your score,” naming race, color, national origin, religion, gender, and income, occupation or employment history. So the number on your free credit app is not the number a carrier rates you on, and there is no published minimum score to point at, because carriers do not share one scale.

What Bad Credit Costs, in Short

The penalty is real and it is largest on full coverage. Nationally, full coverage averages about $3,936 a year with poor credit versus about $2,356 with good credit, roughly 67 percent more, according to NerdWallet’s July 2026 rate analysis. On minimum coverage the same publisher puts the gap far smaller in dollars, about $1,015 against about $646, because the premium base it multiplies is smaller.

Those are published third-party benchmarks, not GoAuto rating factors, and no national average prices your record, your ZIP code, or your car. For the full state-by-state view of the good-credit to poor-credit gap and how far it stretches in high-cost states, see the companion guide to what bad credit costs by state. The rest of this article is about lowering that number rather than measuring it.

Which States Limit or Ban Credit-Based Insurance Scoring

Four states do not allow it in auto insurance at all, which means credit plays no part in your price there. A fifth, Washington, is the one people most often get wrong, because a ban was briefly in force and then invalidated.

State	Status for auto insurance	Basis
California	Not permitted	Under Proposition 103, rates rest primarily on driving record, annual miles, and years of experience; other factors need regulatory approval and “a substantial relationship to the risk of loss.” Credit is not among them (Cal. Insurance Code 1861.02)
Hawaii	Not permitted	No insurer may base a rating plan “in whole or in part, directly or indirectly” on a person’s “credit bureau rating” (HRS 431:10C-207)
Massachusetts	Not permitted	Chapter 195 of the Acts of 2011 bans credit-based insurance scores in private passenger auto underwriting and rating
Michigan	Not permitted for rating	“An insurer shall not use an individual’s credit score to establish or maintain rates or rating classifications for automobile insurance” (MCL 500.2162). Credit may still be used for installment payment options
Washington	Permitted, with restrictions	A 2021 rule banning credit scoring was invalidated by a Thurston County Superior Court ruling in 2022 and not appealed. The Office of the Insurance Commissioner states there is “currently no ban”

Most other states permit credit scoring but regulate how it is used, and Washington shows what those guardrails look like. Insurers there cannot use credit alone to deny or cancel a policy, and cannot use the number of credit inquiries, medical-bill collections, first-time financing of a vehicle or home, particular card types, or your total available credit. If credit keeps you from the best rate, they must tell you in writing. They must re-check credit at least every three years, and must re-rate back to the policy’s effective date if you correct an error. Rules differ by state, so confirm the current one with your state’s department of insurance.

Which Types of Insurers Weigh Credit Least

In states that allow it, nearly every insurer uses credit as one pricing factor, so a mainstream “no credit check” auto policy is rare. Advertised versions usually mean the carrier writes where credit scoring is not permitted, it weighs credit lightly relative to your record, or the product prices you on observed driving instead. Some carriers offer telematics or usage-based programs that incorporate observed driving behavior into the rate; program availability, the data collected, and the effect on rate are described in the program disclosures.

The better question is which carrier weighs credit least for someone with your record, and only comparing quotes at identical coverage levels answers it. That costs nothing in credit terms: as NerdWallet states, “there is no hard credit pull when you get a car insurance quote, so shopping around won’t affect your credit score.” Quote several carriers at the same coverage level, and let the one that weighs your file most gently show itself.

How to Improve Your Credit-Based Insurance Score

The weighting tells you exactly where to spend effort. Payment history and outstanding debt are about 70 percent of the score between them, so two habits carry most of the result: pay every bill on time, and bring revolving balances down relative to your limits. Length of history, new-credit activity, and credit mix split the remaining 30 percent, which is why opening several new accounts at once, or closing your oldest card, can work against you.

A short, practical list:

Pay on time, every time. A single missed payment weighs against the largest slice of the score, and the damage eases as the on-time streak rebuilds.

Lower your utilization. Paying balances below roughly a third of each limit, and below ten percent where you can, moves the second-largest slice.

Keep old accounts open. Length of history helps you, so leave a long-standing card open even if you rarely use it.

Space out new credit. Each application is a small, temporary drag, and a burst of them reads as risk.

Fix errors. Pull your reports, dispute anything wrong, and you may lift the score without changing a single spending habit.

These scores are recalculated from a credit file that keeps changing, so an improvement is not permanent and neither is a setback. Re-quoting, rather than arithmetic, is how you find out whether a better file has reached your price, and there is no credit cost to checking.

Your Rights When Credit Raises Your Price

If credit information causes an insurer to decline you or charge you more, that is an adverse action under the federal Fair Credit Reporting Act, and it triggers rights you can use. The Consumer Financial Protection Bureau puts it plainly: “If you received a notice that you were denied credit, insurance, or employment or experienced another adverse action based on a credit report, you can get a free copy. You must request it within 60 days after you receive the notice.” Use it. Report errors are common, and one quietly costing you every month is worth an hour of your time. If you get one corrected, tell your insurer: some states require the policy to be re-rated back to its effective date.

There is a second right most drivers have never heard of. Many states have adopted a model law requiring insurers, on written request, to make reasonable exceptions for a consumer whose credit was directly influenced by an extraordinary life circumstance. The NAIC notes that “many insurers will reconsider a change in premium if a policyholder experienced an extraordinary life circumstance like a catastrophic event, job loss or serious illness.” Qualifying events typically include a declared disaster, serious illness or injury, a death in the immediate family, divorce, identity theft, involuntary job loss, and military deployment. It is neither automatic nor universal: you must ask in writing and documentation is normally required. Ask anyway. If you are not sure where you stand, contact GoAuto to walk through the options for your situation.

Frequently Asked Questions

Do all car insurance companies check your credit?

Most do, in the states that allow it, which is the majority. California, Hawaii, Massachusetts, and Michigan do not permit credit-based insurance scoring in auto insurance, and other states restrict how it may be used, for example by barring denial of coverage on credit alone. Where credit is checked, it is a soft inquiry that does not hurt your score, and it is only one factor in underwriting. Carriers weigh it very differently, so quote more than one.

Does getting a car insurance quote hurt your credit score?

No. There is no hard credit pull when you get a car insurance quote, so shopping around does not affect your credit score. Insurers use a soft inquiry, which does not appear to lenders as an application for new credit. Some states also prohibit the number of inquiries on your report from being used as a rating input at all. The only cost of comparing quotes is your time.

How can you lower car insurance with bad credit?

Work the two factors that carry the most weight: pay every bill on time and bring your balances down, since payment history and outstanding debt are about 70 percent of a credit-based insurance score. Fix any report errors, ask for an exception if an extraordinary life event hurt your credit, avoid a coverage lapse, and re-quote several carriers at the same coverage level as your file improves.

Is a credit-based insurance score the same as a credit score?

No. Your credit-based insurance score is not the same as your regular credit score, according to the NAIC. It draws on similar credit file information, weighted roughly as payment history 40 percent, outstanding debt 30 percent, length of history 15 percent, new credit 10 percent, and credit mix 5 percent, but it predicts the likelihood and cost of a claim rather than repayment of a debt. It also cannot use race, religion, gender, income, or occupation.

Does paying car insurance on time build credit?

No. Car insurance premiums are not reported to the credit bureaus as a credit line, so paying them on time does not build credit the way a loan or credit card can. The relationship runs one way: your credit can affect your premium in most states, but your premium payments do not feed back into your credit file. Missing payments can still cause a cancellation, and an unpaid balance sent to collections can end up on your report.

What This Means for You

Credit changes your price at most carriers in most states, and on full coverage it changes it by a lot. But it works as one factor among many rather than a pass or fail gate, it uses a separate insurance score rather than the consumer score you check on your phone, and in four states it plays no part at all. What you can act on is unglamorous: pay on time, bring balances down, pull the free report an adverse action notice entitles you to, ask about an exception if an extraordinary event damaged your credit, and re-quote as your file improves. Do not go uninsured while you wait, because a lapse is its own rating factor and driving uninsured carries penalties of its own. The areas served overview shows where GoAuto operates.

About GoAuto

GoAuto Insurance writes auto coverage across its licensed states, and considers drivers with a range of records. GoAuto focuses on state-minimum liability coverage, the lowest coverage level the law allows, and can handle an SR-22 filing when a state requires one. Down-payment and payment options vary by state and situation. Eligibility, coverage, and pricing depend on your state and your individual circumstances, so to see what applies to you, get a quote.

This article is for general informational purposes only and is not legal, financial, or insurance advice. Coverage, pricing, eligibility, filing timelines, and SR-22 or state-minimum requirements vary by state and by driver. GoAuto Insurance is available in TX, LA, GA, FL, NV, OH, AL, and TN. Confirm requirements with your state DMV and get a quote for terms specific to you.