How Do You Get Cheap Car Insurance With Bad Credit Score?
Virtually all insurers check your credit score as only about 10% do not. The problem is that finding one that does not will generally require a local search in your area. There are several reasons for this, but mainly speaking, there are few, if any, major insurance companies that like to advertise whether the use credit scores or not when calculating your insurance premiums.
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When it comes to getting insurance, there are numerous factors that can determine the premiums that you pay. One of those factors is your credit score. It may have a considerable impact on what you will pay for your car insurance depending on the report.
For those with a poor credit score, there are options that allow you to purchase no credit – checked car insurance.
In order to calculate your premiums, auto insurance companies use a number of statistics to assess the risk of insuring your vehicle. One of the more controversial stats used in their calculation is credit score, which may raise or lower the amount you pay for your premiums.
What is a credit check?
A credit check is performed by insurance companies because it is a factor in how a person will pay for their insurance as well as a statistic of their chances of being in an accident.
Depending on the person’s credit score, they may have considerably more difficult getting a low, affordable auto insurance. Such people are seen as a substantial risk for not fully paying for the policy.
Fact: Poor Credit Scorers are Considered as Risky Drivers.
However, there is also statistical evidence that people with poor credit scores are also a greater risk in terms of accidents on the road. Therefore, it is not surprising that many people are looking for affordable insurance and no credit check.
So, before you start looking for car insurance, it is best if you first look at your own credit score to see if it may be low enough to cause higher insurance rates.
What is a Good Credit Score?
Generally speaking, a good credit score for most insurance companies is around 650. Of course, your rate may vary depending on some additional factors, which include your history with the insurance company in making timely payments.
Those who enjoy a credit score higher than 650 will see their rates decreasing as it goes up.
If your score is well below 650?
650 is the break-over number because the lower your score is, the higher your premiums will be. In fact, a terrible credit score may send your insurance premiums skyrocketing again depending on your history with the insurance company.
How can you analyze your credit report?
The good news is that you can get a credit report from free sources. They will provide not only the score, but also the reasons why it is ranked the way that it is. This means that before you set out to get car insurance with no credit check, you should first look at your credit score and see if it is going to be a real problem.
The good news is that credit scores do not have the same impact as they would on getting a loan or mortgage.
For example, the insurance can be dropped the moment you stop paying. This is unlike a loan where the money is already in your hands, and you are trusted to pay off the debt. However, if you really have a bad credit score, then it will affect the rates you pay for car insurance.
While it is rare that you will be rejected strictly on the grounds of your credit score, you may wind up having to pay a far higher amount than you desire.
Tips to Improve Credit Score
There are a number of ways that you can improve your credit score and the best way to start is by looking over your credit report.
- Pay off old debt
- Remove information that is no longer valid
- Start building good credit through paying off loans and bills
It may take time to improve your credit score, but approaching each issue one at a time will start lifting the number upwards. You should take opportunities to build new credit as this will help boost your score as well.
However, you are still not obliged to get no credit check car insurance as there are factors that can improve your status with insurance companies.
How to demonstrate your low risk status?
Remember that your credit score is one of many factors, so when presenting yourself to insurance companies, you’ll want to demonstrate the following;
- Both you and your spouse driving record
- Paying insurance on time
- Improvements in your credit record
- Driving a lower risk vehicle
Each of these factors plays an important role in getting you the best premiums for your insurance policy.
A good driving record and paying for your insurance on time are two potent reasons why insurance companies may reduce your premiums.
Auto Insurance Companies That Don’t Check Credit
Virtually all insurers check your credit score as only about 10% do not.
The problem is that finding one that does not will generally require a local search in your area. There are several reasons for this, but mainly speaking, there are few, if any, major insurance companies that like to advertise whether the use credit scores or not when calculating your insurance premiums.
The reason why credit scores are used is two-fold. The first is that your credit score is an indication of your ability to pay back a loan. It may be a little off-putting to understand, but when you pay for your insurance one month at a time, you are really taking out a loan from the insurance company. That is why there is a substantial discount when you pay for it all at once.
The second reason is that those with higher credit scores tend to be in fewer accidents. There is no known reason why, but because it does exist, insurance companies will factor that into your premiums.
What to look for in no credit check car insurance?
There are currently three states that ban insurance companies from using a credit score when calculating premiums. Hawaii, Massachusetts, and California. This means that if you live in any of the three states, your credit score cannot be used in any way to set the rates that you pay.
The fundamental reason the three states passed laws curbing the use of credit scores in auto insurance calculations is because of the nearly 43 million Americans who have medical debts and low income that prevent them from obtaining a higher credit score. There are also statistics which show that minorities are often subject to lower credit scores for a variety of reasons.
Unless you live in the three states above or find a local insurance company that does not use your credit score, your rates will be determined in part by your credit rating. That’s why it pays to improve the credit score when you can to enjoy lower premiums.
What to look for in no credit check car insurance?
The first step is to look at your present auto insurance company and see if they offer non credit based car insurance.
This means that you can pay under the new policy, which may provide lower rates if that is the sole factor in your premiums going up. However, if your insurance company has no such policy or will not allow you to take advantage, then there are other options.
Free Quotes: When searching for coverage with no credit check, you should get free quotes from insurance companies that provide such a service. That way, you can find the low -cost insurance with no credit check that best meets your needs.
Find the Parameters: Basically, when looking for cheap car insurance without checking the credit score, understand all the factors that may be involved in their free quote. You may find that different insurance companies look at different factors in making their determination.
Remember to Negotiate: You should use all the positive factors on your side when negotiating for cheap car insurance without credit check. This means the driving record, age of your vehicle, your age and so forth. Every factor that you can bring into the negotiating process on your side will help you get the right insurance for your needs.
Why does your credit matter for car insurance?
The reason why credit matters when it comes to car insurance is because drivers with poor credit are considered higher risk to insure. The Insurance Information Institute (Triple-I) explains that having a low credit score is a good predictor of future insurance claims. Data shows that drivers who have bad credit are more likely to file claims, which costs insurance companies money.
To compensate for potential claims, the insurance company charges drivers with lower credit standing a higher premium. Ultimately, charging drivers a higher rate for having bad credit is a way for the insurance company to lower its own financial risk and liability.
What is a credit-based insurance score?
Your credit-based insurance score, or insurance credit score, is used to determine how likely you are to file a claim. It gives insurers an idea of how big of a risk you are to cover, and helps them decide how much to charge you for coverage.
While using credit-based insurance scores to calculate rates is legal on the federal level, insurance companies typically aren’t allowed to use credit history as the sole reason for increasing rates or denying or canceling a policy.
The Bottom Line:
Remember that if your credit history improves over time and transforms into excellent credit, you can then seek out the opportunity to review the policy and perhaps get an even better deal. The good news is that you can find no credit check auto insurance at rates that are affordable. All you need to do is start looking.
Our website is a great place to begin your efforts at finding auto insurance with no credit check that fits your budget.