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 rates. There are people suggesting names of firms who provide 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 There is a high chance that some of these sources may be too old and out of date.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 Who Don’t Check Credit?
Probably the burning question is; which auto insurers don’t check credit? First of all, California, Hawaii and Massachusetts don’t allow 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 who don’t take credit into account is less than 10% but this figure is changing fast towards a lower figure. These insurers would be the best ones to check with for high risk drivers who are not favored by traditional providers due to bad driving history, credit or any other reasons.
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 score. In other words, even if you find an insurer you will probably get high automobile insurance no credit check quote from them. Most people who are struggling to find affordable premiums have totally different problems like too many tickets, claims or no driving history. For example, a young driver is unlikely to have any financial 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 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 providers to start with. Think twice before asking for no credit check quotes and never accept a quote before you get a few more.
One of the main reasons for this suggestion is that most bad credit car insurers are normally more expensive than the main stream carriers to start with. So, their final price may be higher than if you were to choose one of the well known firms to get your quotes. So, it is best that you get a few 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 auto insurers use your score to fine-tune their 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.
You should not pay too much attention to who don’t check credit score. Instead, you should look for a company that will offer you overall cheaper automobile insurance premium.
5. Look for Car Insurance Companies who Are Good for Bad Credit
Some providers are rumoured not to charge too much for bad credit even though they may take it 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 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 considerable changes in your circumstances and they like to recalculate the renewal premium.
- Fourthly, they run their checks 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 score has not fallen enough to concern your current provider. 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 carriers 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 established insurers DO check credit history. And the ones who DO NOT check are usually substandard carriers that like to charge ton of money anyway.
Also, you need to know that insurance credit scoring is different than FICO score. Every company has their own way of including this 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.