I am one of the millions of Americans who suffered from having bad credit for a long time. While I knew this affected my ability to make purchases across a wide spectrum of categories, I did not know for the longest time that your credit score actually has a huge impact on your car insurance rates. While my credit score has since improved, buying car insurance with a sub 600 credit score was a much more stressful and time consuming ordeal than I could have ever imagined.
I paid for my first policy on my own when I was 23 and purchased my first new car. At that time I had been driving for 5 years and had not gotten so much as a speeding ticket and had never been in an accident, so I started my car insurance buying experience with the expectation that I would qualify for a really low rate. When I started to look around and received insurance quotes that were higher than the monthly payment of my car I was dumbfounded. That’s when I learned that most auto insurance companies treat low credit drivers the same as a high risk driver with several accidents. After a few days of shopping around and reading about the subject, I found out that generally speaking, low credit customers file more claims than high credit consumers which is the reason why auto insurance companies started adopting this policy.
Through extensive research I learned that most insurance companies do not view you as an individual at all and do not examine personal circumstances but instead calculate your rate based upon risk factors for overall groups. An insurance company basically views you as a 1-10 sliding scale of risk factors and bad credit pushes you towards a 10 even if you have no other significant risk factors.
So how did I get around this and end up finding affordable insurance with bad credit? It took a lot of homework and shopping around. I found out that while most do, not every insurance company factors your credit score into account and some insurance companies give your credit score significantly less weight than others. Armed with this information I submitted rate quote requests for several local insurance agencies I found that did not take credit score into consideration and a few that did to compare. On average, the quotes I got back from the insurance companies that did not factor in credit score were 50 percent lower than the ones that did. By shopping around and being patient throughout the process I was able to settle on an insurance carrier that saw through my credit situation and realized that given all of my others factors, I was in fact a low risk driver to insure.
In the end the only direct consequence of my bad credit when it came to getting car insurance ended up being that I could not make my insurance payments on a monthly basis but instead ended up paying my first years insurance in two upfront payments for 6 months of auto insurance. By taking advantage of this I was able to get insurance from a nationally reputable insurance agency at a price that was significantly lower than making the payments in monthly installments. If you have bad credit and are looking for car insurance, my best advice is to remain diligent and don’t give up on the process. You will get quotes for rates that are outrageous, but continue on in the process and you inevitably start to find the insurance companies that don’t weigh your score and you can begin to compare and find the best rate for what you’re looking for based on that information.