The best car insurance for people with bad credit in 2026

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Finding out your credit score is affecting your car insurance rates can feel like a punch to the gut — especially if you’re already working hard to get your finances back on track. On average, drivers with poor credit pay 113% more for full coverage than those with good credit, which works out to roughly $2,900 more per year. The good news is that bad credit doesn’t lock you into bad rates forever.

Insurers weigh a lot of factors when setting your premium, and credit is just one of them. Rates also vary significantly by company — GEICO averages $3,555 per year for drivers with poor credit, while State Farm averages $12,707 for the same profile. By knowing which companies tend to be more lenient, which states restrict how credit can be used, and what steps you can take right now, you can find coverage that’s actually affordable — and build toward even better rates down the road.

Does your credit score affect your car insurance rates?

In most states, your credit score affects your car insurance rates, often more than drivers expect. Insurers use a credit-based insurance score to estimate how likely you are to file a claim, and drivers with lower scores are typically charged higher premiums as a result.

Most regulators don’t allow insurers to base decisions solely on credit, but it can be factored into pricing alongside things like your driving history, location, and the type of vehicle you drive.

Here’s what insurers typically look at in your credit history:

• Payment history. Late or missed payments are one of the biggest red flags and can raise your rate meaningfully.
• Debt levels. High balances relative to your credit limit may signal financial stress, which insurers associate with higher risk.
• Credit behavior. Frequent applications for new credit or a large number of open accounts can also affect your insurance score.

How much more do drivers with bad credit pay?

Drivers with bad credit pay about 113% more for full coverage on average — or $2,900 more per year than drivers with good credit. Even drivers with fair credit pay around $702 more annually.

Credit scores below 580 are generally considered poor, while scores between 580 and 669 are considered fair. If you’re in either range, you’re likely already feeling the impact on your premium. The exact increase depends on your state, your insurer, and the rest of your profile — but the numbers make a strong case for both shopping around and working on your credit over time.

What are the best car insurance companies for drivers with bad credit?

GEICO, Nationwide, and Farmers are consistently among the best car insurance options for drivers with bad credit, offering some of the most competitive rates for this group. GEICO averages $3,555 per year for drivers with poor credit, Nationwide comes in at $4,198, and Farmers at $5,695. USAA is the most affordable option at $3,069 per year, but coverage is limited to military members, veterans, and their families.

Not all insurers treat credit the same way — and the data makes that clear. State Farm, for example, charges drivers with bad credit an average of $12,707 per year, a 342% increase over its good credit rate. Amica isn’t far behind, with a 180% jump. That means the company that’s cheapest for a driver with good credit might not be the best choice for someone with a lower score. There’s no substitute for getting multiple quotes and comparing them side by side at the same coverage levels.

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Cheapest car insurance for bad credit by state

The cheapest car insurance for drivers with bad credit varies significantly by state — and in most cases, GEICO, Progressive, and USAA offer the lowest rates. Where you live can be just as important as which company you choose, with annual rates for poor credit ranging from under $2,000 in states like Idaho and Maine to over $10,000 in places like Michigan and Washington, D.C.

Use the table below to find the most affordable insurers in your state.

How to find the best car insurance with poor credit

The best way to find affordable car insurance with poor credit is to compare quotes from multiple insurers. Rates for the same driver can vary by hundreds of dollars per year depending on the company, so shopping around is the most effective move you can make.

You can compare quotes in two main ways:

• Online comparison tools. Quickly check rates from several insurers at once. Fast, easy, and good for a broad overview.
• Insurance agents. Get personalized quotes and advice tailored to your situation. Especially useful if your profile is complex.

If you go the agent route, it helps to know the difference between your options:

• Captive agents. Represent a single insurance company — so their quotes are limited to one insurer’s rates.
• Independent agents. Work with multiple insurers and can compare policies across companies to find you the best fit.

Whichever route you take, always compare policies at the same coverage levels. A lower premium that comes with less protection isn’t always the better deal.

“To secure the best policy at the best price, you should consult a few agents rather than one.” — Kevin Hamill, owner of Alliances Insurance Agency

Why do car insurance rates for bad credit vary by state?

Car insurance rates vary by state because each state sets its own rules about what factors insurers can use when pricing policies — and some states restrict or ban the use of credit scores entirely. On top of that, local factors like traffic density, weather patterns, and regional claim rates all push premiums up or down independently of credit.

“Weather conditions, population data, and the amount of accidents per year in a particular region will all affect the cost of car insurance.” — Julie Bausch, Managing Editor of Car Talk

States where credit scores can’t be used at all

Five states prohibit insurers from using credit scores in car insurance pricing entirely:

• California, Hawaii, Massachusetts, Michigan, and New Jersey. In these states, your credit score has no bearing on your car insurance premium — which can make a significant difference for drivers with poor credit.

States with partial restrictions

Three states allow credit to be used for new policies but limit how it can be applied at renewal:

• Oregon, Maryland, and Utah. Insurers can use credit to price a new policy but cannot deny your application, cancel your coverage, or raise your premium at renewal based on your credit score alone.

How Paige improved her credit score and lowered her rates

By age 31, Paige found herself with poor credit after opening multiple credit cards, missing payments, and only paying the minimum each month. “I just kept putting it off, and eventually that caught up with me,” she says.

When she applied for car insurance in South Carolina — a state that allows credit to be used in pricing — she was shocked by the quote. “I want to say I was originally quoted around $2,500 annually, but I also had filed a claim the year before,” she recalls.

Over the following years, Paige focused on getting on top of her bills, paying her balance in full each month, and limiting the number of new credit accounts she opened. Now 42, she says the difference has been real. “My rates are much more affordable now.”

Her experience is a good reminder that the effects of bad credit on insurance aren’t permanent. Consistent habits rebuild both your credit score and your premium over time.

How to improve your credit score — and lower your rates over time

The most effective ways to improve your credit score are paying all bills on time, reducing outstanding balances, and fixing any errors on your credit report. These steps won’t change your premium overnight, but most insurers review credit periodically — so even a moderate improvement can shift you into a lower pricing tier over time.

• Fix errors on your credit report. Mistakes are more common than you’d think. Check your reports from Equifax, Experian, and TransUnion at annualcreditreport.com and dispute anything that looks wrong.
• Pay all bills on time. Payment history makes up about 35% of your credit score — it’s the single biggest factor. Even one missed payment can set you back, so set up autopay where you can.
• Reduce your outstanding balances. Credit utilization — how much of your available credit you’re using — matters a lot. Keeping balances below 30% of your limit can meaningfully boost your score.
• Build credit if you’re starting from scratch. If you have a thin credit file, a secured credit card or credit-builder loan can help you establish a track record of responsible payments.
• Limit new credit applications. Each application creates a hard inquiry, which can temporarily lower your score. Apply for new credit only when you really need it.

How to lower your car insurance costs right now — even with bad credit

You can lower your car insurance costs with bad credit by comparing quotes from multiple insurers, asking about available discounts, and adjusting your coverage to match your current needs. You don’t have to wait for your credit score to improve — these steps can make a real difference today.

• Compare at least three quotes. Rates vary more than most drivers realize. Getting multiple quotes is the fastest way to find out if you’re overpaying.
• Ask about every available discount. Many drivers with poor credit leave discounts on the table simply because they don’t ask. Common ones include accident-free driving, anti-theft devices, anti-lock brakes, good student status, bundling policies, loyalty discounts, and paying your premium in full upfront.
• Raise your deductible. If you can comfortably cover a higher out-of-pocket cost after a claim, a higher deductible can lower your monthly premium.
• Bundle your policies. Combining auto and home or renters insurance with the same insurer can save you up to 20%.
• Enroll in a telematics program. Safe driver apps track your driving habits and can reward you with lower rates — your credit score doesn’t factor into this discount at all.
• Drop coverage you don’t need. If your car is older and paid off, collision and comprehensive coverage may not be worth the cost. Check your car’s current value and do the math.

Bad credit doesn’t have to mean bad rates — here’s where to start

Poor credit makes car insurance more expensive. But it doesn’t make affordable coverage impossible. The drivers who find the best rates despite bad credit are the ones who shop around, ask about every available discount, and stay proactive about improving their credit over time.

Start by comparing quotes from at least three insurers — including GEICO, Nationwide, and Farmers, which consistently offer competitive rates for this group. And if you’re actively working on your credit, don’t forget to ask your insurer to re-run it before your next renewal. A little effort now can translate into real savings sooner than you’d expect.

Alisha Ambre

 

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Alisha Ambre holds a Bachelor of Arts with honours in English Literature and Media Studies. She focuses on crafting clear, engaging content that makes complex information feel practical and approachable for everyday readers. When she’s not writing, she’s likely on the volleyball court or immersed in a good video game.