Your credit score quietly determines how much you pay for car insurance — and if yours is below 580, you could be paying over $1,500 more per year than your neighbor with excellent credit. Same car. Same driving record. Wildly different bill.
- Poor-credit drivers pay 80–110% more than excellent-credit drivers nationally.
- Average annual premium difference: ~$1,500+ depending on state and insurer.
- California, Hawaii, Massachusetts, and Michigan ban credit-based insurance pricing.
- Shopping 3–5 insurers is the single fastest way to cut your rate.
How Much More Do Bad Credit Drivers Pay for Car Insurance?
A lot more. Here are 2026 national average annual premiums by credit tier:
| Credit Tier | Score Range | Avg. Annual Premium | vs. Excellent |
|---|---|---|---|
| Excellent | 750+ | $1,390 | — |
| Good | 670–749 | $1,730 | +25% |
| Fair | 580–669 | $2,180 | +57% |
| Poor | Below 580 | $2,940 | +112% |
That's real money. Marcus, a delivery driver in Ohio with a 560 credit score, switched insurers and still paid $2,800/year — until he spent a weekend comparing quotes and found a regional carrier that charged him $2,100 for identical coverage. Same score. $700 back in his pocket.
Insurers don't all weigh credit the same way. That's why two companies can quote you $800 apart for the exact same policy.
Which States Use Credit Scores for Car Insurance Rates?
Most states allow it — but four don't. If you live in California, Hawaii, Massachusetts, or Michigan, insurers legally cannot use your credit score to set your premium. Check the full breakdown of car insurance laws by state — the rules vary more than most drivers realize. Everyone else? Fair game.
Washington state temporarily banned credit scoring in 2021 — courts later overturned it. The legal landscape keeps shifting, so it's worth checking your state's current rules before assuming credit affects your rate.
How to Get Lower Car Insurance Rates Despite Bad Credit
Honestly, most bad-credit drivers overpay because they never shopped around. Here's what actually moves the needle:
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1Compare at least 3–5 insurers. Some companies — particularly regional carriers — weight credit far less heavily. GEICO, Progressive, and State Farm all use different credit models.
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2Bundle home and auto. Multi-policy discounts (10–25%) can partially offset credit surcharges.
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3Raise your deductible. Going from $500 to $1,000 can cut your premium 10–15%. Just keep that deductible amount liquid.
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4Ask about non-credit discounts. Safe driver programs, low-mileage discounts, and telematics apps like Snapshot or DriveEasy judge you on driving behavior — not credit.
Bad credit costs drivers hundreds to over a thousand dollars extra per year — but it's not a fixed penalty. The fastest fix is comparing quotes from 3–5 insurers. Rates for identical coverage on the same driver routinely vary by $500–$800. Shop first, then work on improving your credit score for long-term savings.
Frequently Asked Questions
Does bad credit automatically disqualify me from car insurance?
No. Insurers cannot deny you coverage based on credit alone in most states — they just charge more. You will always be able to get insured.
How much can my car insurance rate drop if my credit score improves?
Moving from Poor to Good credit typically reduces premiums by 30–50% nationally, potentially saving $600–$900 per year on average.
Do all car insurance companies check your credit score?
Most do in states where it's permitted, but a handful of smaller regional insurers don't — another reason why comparing quotes matters so much.
Your credit score isn't permanent, and neither is your insurance rate. Start comparing now and revisit quotes every time your score improves by 50+ points.