Auto Insurance With Bad Credit
Credit-based insurance scoring is legal in most states and can meaningfully affect your premium. Here's how it works and how to shop around it.
What Credit-Based Insurance Scoring Is
It's a score, distinct from your standard credit score, that insurers in most states can use as one factor in pricing auto insurance — based on the theory that certain credit behaviors statistically correlate with claim likelihood. It's calculated differently than your FICO score and used only for insurance pricing, not lending decisions.
States That Restrict It
California, Hawaii, and Massachusetts prohibit the use of credit-based insurance scoring entirely. A few other states place restrictions on how heavily it can factor in. If you're in one of these states, your quote is decided on driving record and other traditional factors, not credit.
If You Also Need an SR-22
Bad credit and an SR-22 requirement together can compound your premium more than either alone — see best high-risk auto insurance for bad credit for carriers that handle this combination.
Ways to Improve Your Quote
- Confirm whether your state restricts credit-based scoring — if so, this factor doesn't apply to you at all.
- Ask about paying in full versus monthly installments, since installment fees compound an already elevated premium.
- Re-shop periodically — credit-based scores and driving records both improve over time, and insurers update at renewal.
Quick Answers
Will paying off debt lower my quote immediately?
Not usually instantly — credit-based insurance scores typically update on the insurer's own cycle, so improvements often show up at your next renewal or re-quote rather than immediately.