Car Insurance for People with Bad Credit

Many people make the mistake of believing that having bad credit will make it hard to find good auto insurance coverage. Fortunately, there are several ways you can secure low rates on auto insurance regardless of your credit standing. Here are a few tips for finding car insurance when you have bad credit.

Straight Facts About Bad Credit Auto Insurance

Most auto insurance companies take a close look at your credit report when you fill out your application so that they can determine your level of creditworthiness. Car insurance companies want to know whether they will be receiving insurance premium payments on time, and whether you are responsible enough to meet your financial obligations. Each auto insurance provider has its own standards and uses different criteria to determine who pays what type of premium.

Having bad credit doesn't necessarily mean you won't qualify for insurance, but you will likely pay a higher-than-average premium for coverage

In some cases, your credit rating may not even be a major factor. Several states do not permit insurance companies to use a person's credit rating as part of the application process, so even people with bad credit can qualify for an attractive rate -- one that's based solely on their driving record and other factors. Your car insurance premium may be adjusted based on your occupation, income level, accident history, commuting distance and other criteria.

Tips for Finding Car Insurance

If you have checked your credit report and know that you have a lower-than-average credit rating, you will need to do some research on different auto insurance companies to find one that offers reasonable rates to people with bad credit.

1. Request a quote from several auto insurance providers online.
2. Make sure your credit report is free of any errors or omissions.
3. Avoid opening new lines of credit within a 60 to 90 day time frame.
4. Take the time to shop and compare different rates.
5. Invest in a car that has less expensive insurance coverage (e.g., avoid sports cars).
6. Find ways to improve your credit rating.

Generally, it's best to avoid taking out a loan just to pay for your car insurance and other bills, as this can make it even more difficult to maintain a healthy credit rating. Be careful about taking out additional loans or applying for credit cards when you are planning to apply for insurance, as your new credit lines may negatively affect your insurance premiums.

Finding affordable car insurance when you have bad credit can be challenging, but there are many auto insurance providers that offer attractive options for people who have less-than-stellar credit. Since insurance scoring models vary significantly by provider, it pays to shop and compare rates from several companies.

Sabah Karimi

---

Read more about Auto Loans

Get help with Auto Loans