Is your credit score worryingly low? Are you looking to purchase your first policy ever, looking again after a while of lapse or renewal is coming up shortly? Should you be worried about it or wait to see what happens? Do car insurance companies check your credit? These are some of the questions that are answered below. Bad credit auto insurance can be expensive and therefore you need to know all your options to avoid paying over the odds.
There are some misleading information on the internet about the affects of credit scores on vehicle insurance. There are people suggesting names of companies that offer no credit check vehicle insurance. There is a high chance that some of these sources may be too old and out of date. You may need to test those claims and see, rather than taking them on face value.
Car Insurance Companies that Don’t Check Credit?
Probably the burning question is; which auto insurance companies don’t check credit? First of all, California, Hawaii and Massachusetts don’t allow automobile insurers to use credit score for premium calculation purposes. If you live in one of these states you don’t need to worry about your bad credit history.
Ratio of vehicle insurance carriers that don’t check credit is less than 10% but this figure is changing fast towards a lower figure. Here are a few points to keep in mind while searching for no credit check car insurance;
1. Your Problem May Not Be Credit Score
There is a 95% chance that why you get quoted high premiums by most vehicle insurers has nothing to do with your credit score. In other words, even if you find an insurer and get no credit check automobile insurance you will only get higher quotes than you got. Most people who are struggling to get cheap auto insurance have totally different problems like too many tickets, claims or no driving history. For example, a young driver is unlikely to have any credit history at all. Nonetheless, they pay high premiums because of different reasons like having no driving history and being young. It is unlikely that having good credit will help them much with most insurers. So, it may be that it isn’t your credit score that is hurting your premiums.
2. No Credit Check Auto Insurance Companies Aren’t Your Friends
There is hardly any traditional (high street or well-known) insurer that offer non credit based car insurance directly. They may have subsidiaries that deal with high risk applicants like people with DUI, too many claims or no credit history. Usually, insurers who specialise on high risk drivers are small and their rates are much higher than traditional insurers to start with. Think twice before asking for no credit check car insurance and never accept a quote before you get a few more quotes, preferably from top insurers.
One of the main reasons for this suggestion is that most bad credit car insurance companies are normally more expensive than the main stream insurers to start with. So, their final price may be higher than if you were to choose one of the well known insurers to get your quotes. So, it is best that you get a few vehicle insurance quotes online and see which company comes up with the cheapest premium for the same coverage.
3. Don’t Eliminate the Best
Nearly all main stream insurers use credit score as one of their key factors while calculating premiums. This means that while you are trying hard to find a company that won’t care about your bad credit you may end up with a company that is not great for prices or service in any case.
4. Every Insurer Looks at Credit History Differently
Even though most car insurers use insurance credit score to fine-tune their automobile insurance quotes every company has different weighting for this data. While some companies are placing high importance on this input many others may not really be much concerned about it. So, the answer would be that you should not be much concerned about which companies don’t check credit score. Instead, you should look for a company that will offer you overall cheaper auto insurance premium.
5. Look for Car Insurance Companies that Are Good for Bad Credit
There are some companies are rumoured not to charge too much for bad credit even though they may take credit into account while they are calculating premiums. For example, according to wallethub.com GEICO is one of those companies. Your best bet is to look for such companies. However, that is exactly what you are doing when you are checking competing auto insurance quotes online. If you get a number of quotes you are bound to find the best car insurance for bad credit.
Does Bad Credit Affect Car Insurance Rates?
There may be four reasons why companies check the credit status of their current policyholders before offering renewal terms.
- The first one is if the policyholder missed any premium payment.
- Secondly, they check when you want to pay the premium in instalments.
- Thirdly, if there are considerably changes in your circumstances and they like to recalculate the renewal premium.
- Fourthly, they check credit scores every so often and you may be due for yours.
So, try not to miss premium payments so as to not alert your current carrier to your deteriorating money situation. There is a chance that your credit score has not fallen enough to concern your current insurer. You should wait and see what renewal terms they will offer you. They would inform you around a month in advance. This would give you plenty of time to get alternative quotes if you are not satisfied with it. If you are a good driver and had no recent claims you would have plenty other insurance companies to go to and one of them would offer you affordable rates.
Final Words on Getting Auto Insurance with Bad Credit
We pointed out above that nearly all main stream insurers DO check credit history. And auto insurance companies that DO NOT check credit are usually substandard insurers that like to charge ton of money anyway.
Also, you need to know that insurance credit scoring is different than FICO credit score. Every insurance company has their own way of including credit into their premium calculations. They usually rate credit in tiers like; Great, Good, Average, Below Average and Unacceptable. Therefore there is no need to panic because of a small dip in your FICO score as it won’t probably affect your rates.