Editorial shortlist

Best Car Insurance for Bad Credit

By YesWeSure EditorialReviewed October 23, 2026Editorial standardsReport an errorSources

Credit is a legal rating factor for auto insurance in 46 of 50 states. In those 46 states, a credit-based insurance score at or below the sub-prime threshold can roughly double your car insurance premium, often by more than the surcharge from a DUI. The exception states are California, Hawaii, Massachusetts, and Michigan: all four prohibit credit as a rating factor outright. In the 46 states where credit matters, the five carriers below tend to lead on affordability for a low-credit profile without pushing you into the non-standard market.

Our shortlist

Carrier	Featured for	Why it fits	Caveat
Travelers	Low credit score, nationwide	MoneyGeek names Travelers "the best cheap car insurance company for drivers with poor credit" at $118/mo (updated October 1, 2026). Independent-agent distribution; IntelliDrive discount-only telematics.	Rated A++ Superior AM Best per the AM Best rating definition page; verify current rating action at bind time.
USAA	Military-affiliated shopper with any credit score	Does not use credit at all in CA/HI/MA/MI (state law prohibits it) and de-emphasizes credit vs peers in most other states where credit is a factor. $132/mo full-coverage average in NerdWallet, updated October 2, 2026 for the eligible group.	Closed membership (military-family eligibility).
State Farm	Credit-sensitive shopper who wants a local agent	Captive-agent distribution with household bundling discounts that can offset a low-credit surcharge for a shopper carrying homeowners or renters together. Rated A+ Superior AM Best (verify current rating action at bind time).	State Farm's credit-factor weighting varies by state filing; the quote at your ZIP is the only reliable comparison.
GEICO	Direct-channel shopper, mid-tier credit	Direct pricing with a large discount menu. GEICO is cheapest large auto insurance company for state-minimum coverage at $41/mo per NerdWallet, updated October 2, 2026. DriveEasy telematics is a path to further savings if driving data is favorable.	DriveEasy is a two-way program (can raise the rate). GEICO is credit-sensitive in several states; verify your tier impact in the quote.
American Family	19-state captive-agent footprint shopper	KnowYourDrive telematics is discount-only (cannot raise the rate), useful for a bad-credit shopper who wants a safe way to earn more off. Rated A AM Best (verify current rating action at bind time).	19-state captive-agent footprint. Not available everywhere.
Mercury	California shoppers (credit cannot be rated there)	In California, Mercury is #2 for full coverage ($115/mo, per NerdWallet California updated October 2, 2026) and leads sub-profiles for 30- and 50-year-olds and after a DUI. California prohibits credit-based pricing under Proposition 103, so Mercury is a strong CA pick regardless of credit tier.	Outside the ~11-state Mercury footprint this row does not apply. For bad-credit elsewhere, use Travelers (above).

Why a bad-credit shopper almost never needs a non-standard specialist

Non-standard carriers (Dairyland, The General, Bristol West, Kemper, National General) write high-risk business and charge accordingly. If your record is clean, your credit alone is not high-risk; it just raises your mainstream-market premium. The right move is to shop the mainstream carriers that de-emphasize credit (above), not to jump to the non-standard shortlist. If you ALSO have an SR-22 requirement, a recent DUI, or multiple at-fault accidents, see our best for high-risk drivers page instead.

States where credit cannot be used

California: Proposition 103 restricts auto insurance to three mandatory factors (driving safety record, miles driven, years of driving experience). Credit is not used.
Hawaii: state statute prohibits credit as a rating factor.
Massachusetts: credit cannot be used.
Michigan: credit cannot be used as of a 2019 reform.

In these four states, a low credit score does not raise your car insurance premium at all. The shortlist above still applies to the specific state footprints each carrier covers; the credit-advantaged carriers are useful because they generalize credit-insensitivity to states that don't require it.

What a credit-based insurance score actually measures

A credit-based insurance score is NOT the same as your FICO or VantageScore. Carriers subscribe to LexisNexis Risk Classifier or FICO's Insurance Score product, which weight the same underlying credit data differently from a mortgage-lending score. Four facts shape the score:

Payment history (roughly 30 to 35 percent weight). Missed payments, late payments, charge-offs. The single biggest lever.
Credit utilization (roughly 30 percent). Balances-to-limits ratio across revolving accounts. Carriers treat 10 to 30 percent utilization as the healthy band; above 70 percent is treated as elevated risk.
Length of credit history (roughly 15 percent). A thin file (recent immigrants, first-time credit users, young adults who use only debit) can produce a sub-prime insurance score even with no derogatory marks.
Mix of credit types and inquiries (roughly 20 to 25 percent). Carriers treat a mix of installment and revolving accounts favorably. Hard inquiries from mortgage and auto-loan shopping within a 14 to 45-day window typically count as one.

The score the carrier uses is NOT visible on your consumer credit reports. You can request your LexisNexis consumer disclosure for free once per year under the Fair Credit Reporting Act; this is the actual data the carrier is pricing against.

Fastest ways to improve the insurance score

Insurance scores typically rebuild faster than general FICO scores because the weight on recent behavior is slightly higher. Three actions compound over 3 to 6 months:

Pay down revolving balances below 30 percent of limits. This often lifts the insurance score more than paying off installment debt of the same dollar amount.
Dispute inaccurate derogatory marks. If a paid collection or a 30-day late is incorrectly reported, dispute it with all three bureaus. LexisNexis pulls from the bureau feeds; corrections propagate.
Open ONE new credit line if your file is thin, but do not shop a new mortgage/auto loan simultaneously. A new secured card or a credit-builder loan broadens the mix without the hard-inquiry penalty of a mortgage shop.

Do NOT close old accounts to "clean up" before you reshop insurance. Closing an old revolving line shortens average account age and can drop the score for 6 to 12 months.

Reshop timing: when the premium drop actually materializes

Month 0 to 3 after credit improvement: no change at your current carrier. Rate is locked for the current 6-month term.
Month 3 to 6: at renewal of your current policy, the carrier re-pulls insurance score. Expect a modest drop if score improved; a shop at this point often beats the renewal.
Month 6 to 12: peak reshop window. A credit-based score that moved from sub-prime to prime typically produces a 30 to 50 percent cheaper quote at GEICO or Progressive compared with the sub-prime quote.
Month 12+: the full discount surfaces at most carriers. Expect to see the biggest spread between carriers at this point, so shop at least 3.

Common questions

Does a hard inquiry for an insurance quote hurt my credit?

No. Insurance quotes trigger a SOFT inquiry on the credit file, not a hard one. The soft inquiry does not affect FICO, VantageScore, or your insurance score. You can quote 3 or more carriers without any credit-score impact.

Will my premium drop automatically if my credit improves?

Only at renewal. Carriers re-pull the insurance score at each renewal (typically every 6 or 12 months). The old score stays in force between re-pulls. Call your current carrier at renewal time to confirm the re-score ran and ask whether it affected your rate; some carriers will re-rate mid-term on a specific request.

Can I ask the carrier to NOT use my credit?

Not in the 46 states where credit is a permitted rating factor. The California/Hawaii/Massachusetts/Michigan carve-outs are state-regulatory, not customer-opt-outs. You CAN ask the carrier what factors drove your specific rate under the FCRA adverse-action notice provisions; the notice is required when credit was a material factor.

What's the credit tier a carrier draws the line at?

Varies by carrier and state filing. Rough industry pattern: 720+ gets the credit-advantaged tier, 660 to 719 is neutral, 580 to 659 pays a surcharge, below 580 is sub-prime and often doubles the baseline premium. The lines are state-regulated and specific to the carrier's filed rate plan.

Do store credit cards and medical debt affect the insurance score?

Store cards: yes, through revolving-utilization weight. Medical debt: as of April 2023, FICO and VantageScore removed paid medical collections and medical collections under $500. LexisNexis Risk Classifier follows the FCRA data; medical collections are treated the same way the FICO changes treat them, meaning smaller medical collections are now typically not drawing down the insurance score the way they used to.

Sources

CNBC Select: Best car insurance for bad credit.
MoneyGeek: Credit-based car insurance pricing study 2026.
California Prop 103 (CIC 1861 et seq.); HI, MA, MI insurance code.
Carrier filings reviewed in-state for Mercury, USAA, State Farm, GEICO, American Family.