Car Insurance Companies That Don’t Factor in Your Credit Score — And Can Save You Big Money

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Your credit score can impact your car insurance rate.

According to a recent Zebra analysis, people whose credit score is below 580 (poor credit) pay $2,729 annually in car insurance. Those with an 800-plus score (excellent credit) pay closer to $1,308. That’s a 48% difference.

If you don’t have credit, or if your score needs work, you still have options. Certain states (including California, Michigan and Massachusetts) either prohibit or heavily restrict the use of credit info in the auto insurance decision-making process.

If you need car insurance that doesn’t factor in your credit, here are a few options.

Dillo Insurance

Available only in Texas, Dillo Insurance doesn’t check your credit. You could even get an insurance policy if you have a spotty driving record or have had lapses in coverage before.

CURE Auto Insurance

CURE doesn’t rely on an individual’s credit score, occupation or education to determine car insurance rates. Rates and options are primarily based on your driving record. Policies are only available in Michigan, Pennsylvania and New Jersey.

Root Insurance

Root Insurance does check your credit when determining insurance premiums, but it’s not the only factor. The company focuses more on your driving record than anything else, meaning you could potentially get a decent rate even with a less-than-ideally credit score.

Differences in Auto Insurance Costs Based on Credit

As per the Zebra study, these are the typical car insurance rates (annual) by credit tier:

• Poor credit (300 to 579) — $2,729
• Average credit (580 to 669) — $2,240
• Good credit (670 to 739) — $1,841
• Excellent credit (740 to 799) — $1,537
• Exceptional credit (800 to 850) — $1,308

As you can see, there’s a $1,421 yearly difference for those in the highest tier versus those in the lowest tier. Even just between “poor” and “average” credit, there’s a $489 difference.

Tips on Improving Your Credit Score

Different states have different rules regarding how credit is used in their auto insurance policies. You can check your state’s Department of Insurance website to see how consumer credit info is applied to your insurance.

Know that your FICO credit score is a combination of several factors, including payment history, credit usage and age of accounts. If you’re trying to improve your credit, here are a few things you can do:

• Make sure you’re paying all bills on time.
• Try to pay down existing debt (increasing your income can help).
• Avoid applying for too many new lines of credit at once.
• Keep older accounts open and in good standing.

And if you’re trying to choose a good car insurance company, remember to look beyond their credit requirements. Just because one company offers a no-credit-check policy doesn’t mean they’re the best option.

“It’s important for drivers to understand which coverage limits are right for them and what those coverages mean. They should take the time to either research options online or consult with an insurance professional like an independent agent,” said Howard Goldberg, vice president of customer solutions at Plymouth Rock Assurance.

Goldberg also suggested making sure the premiums offered through different companies have the same coverage limits and deductibles. That way, you’ll get a better — more accurate — idea of what’s available and pricing.

A few other things worth looking into when choosing a car insurance company are:

• Customer service and ease of doing business with them
• How they handle the claims process after an accident
• State insurance laws
• Types of coverage versus what you need
• Cost and value
• Optional or additional coverage
• Strong financial ratings (check with agencies like A.M. Best)
• Solid history and presence
• Discount options
• Payment options

“Talking to an independent agent is a great place to start since agents can guide decision-making based on their experience and understanding of individual coverage needs,” said Goldberg. “If drivers decide to shop on their own, it’s important to get quotes from multiple companies, review coverages and benefits, and identify potential cost-saving options.”

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