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Tips for Bad Credit Car Insurance

When you have bad credit, finding affordable car insurance can be awfully tricky. Why is that? Well, your credit score does have a bearing on the price of your personal car insurance quote. Most insurers use your credit score to predict how many claims you might file while covered by them. Apparently they see some correlation between bad credit and a higher number of claims filed. It seems unfair because those with bad credit might be having other financial problems, but auto insurance companies are just trying to do their best. How can you get more affordable car insurance if you’re credit isn’t great?

1. Move to One of these 3 States 

Of course a move just to get cheaper car insurance isn’t the most logical solution, but there are three states, which prohibit companies from basing their insurance quotes based on a customer’s credit score. Those states are California, Hawaii and Massachusetts. If you already live in one of those states then getting good car insurance with bad credit shouldn’t be too much of a hassle. If you don’t, moving to one of those states could save you up to $2,000 per year on car insurance.

2. Improve Your Credit

If you work hard to improve your credit, you can get lower car insurance payments in the future. Sure, this doesn’t help you in the moment, but planning for a better future can get you out from underwater. How do you improve your credit? Pay your bills by the due date, pay your credit cards down over time, and use only up to 10% of your total credit card balance. 

3. Create Credit

If you are young you probably have little to no credit history. In terms of your credit score, this is basically the same as having bad credit. With no credit report, agencies can’t determine how responsible you will be. So, start building up your credit as soon as you are able. Getting a low balance credit card or making a big purchase like a computer for college on credit can help to start your credit history off on the right foot. Keep your oldest accounts open even if you no longer use them anymore to show that you have been responsible for as long as possible.

4. Check Your Credit Report for Mistakes and Fraud

Sometimes bad credit can be caused by identity theft or even a mistake. Check your credit report frequently and make sure everything on there is accurate. If you notice something that seems fishy you may need to investigate and find out what is going on. It might be a bit of work now, but you will appreciate it when your auto insurance rates are more affordable later on.

5. Be a Good Driver

Some car insurance companies give discounts to drivers who have good driving records. If you’re a great driver with a bad credit score, eventually your insurance company may give you a break on the price for being so trustworthy on the road. Don’t drive recklessly and avoid getting in an accident if you want to get cheaper car insurance. This isn’t a quick fix because some insurance providers want you to show them you’re a good driver, so you may have to wait a few years before this insurance discount can kick in.

6. Just Ask

It can never hurt to ask. If you really need a discount of some sort, call up your auto insurance company and see if you qualify for any type of discount. There may be some cheaper insurance prices that you can get, and you would only know about it if you ask! Being proactive can also help you fix your bad credit by calling your credit companies and asking for better interest rates. It does take a few minutes on the phone but it can save you a lot of money down the road.

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