The best car insurance for bad credit is from Geico and Progressive, because they are less reliant on credit data than other major insurers when setting car insurance premiums.
People with bad credit can also look up regional no-credit-check car insurance companies. However, it’s important to realize that these companies are smaller and cater to high-risk customers, so they might not necessarily be cheaper. Instead, the best strategy to find cheap insurance with poor credit is to compare quotes from several different insurers, starting with Geico and Progressive and then widening your search.
It’s also worth noting that many states have laws regulating how insurers can use credit, in order to protect consumers.
Regulations on Credit Use for Car Insurance
- Massachusetts, Hawaii and California ban auto insurance companies from using credit information.
- Michigan prevents insurers from using credit scores, but not insurance scores, which are based on credit data.
- Washington forbids insurers from denying coverage based exclusively on credit.
- Oregon insurers cannot cancel or refuse to renew a policy due to credit more than 60 days after the original policy start date.
- Texas requires insurers to disregard poor credit originating from divorce, a family member’s death, temporary unemployment, or a similar life event.
- Many states ban insurers from using scores that take demographic information into account, although FICO specifies that it never considers race, gender, marital status or other prohibited factors.
Insurance laws vary widely by state, and this is not a complete list. You can look up your state’s department of insurance for more information on its specific regulations. Additionally, most insurance regulators allow consumers to file a complaint if they believe an insurance company violated state laws.
Finally, even though poor credit might be hurting your car insurance premiums now, it’s important to remember that your credit score can change. To help decrease your premiums over the long run, check your credit score and learn how to improve it.
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