Few consumers are aware that insurance companies typically use credit information when evaluating an auto insurance application. According to the Insurance Information Institute, insurance companies have recognized a connection between credit history and claims risk. Those with poor credit scores are 40 percent more likely to file claims than those with clean credit histories. Although getting auto insurance with bad credit can be a challenge, there are ways for credit-challenged consumers to get the coverage they need.
Obtain a copy of your credit report from Equifax, Experian or TransUnion. Review the information contained in the report carefully. If you find erroneous data, write a letter to these credit bureaus asking them to investigate and remove the data. This can help your odds of obtaining car insurance through a standard company, and can allow you to obtain coverage at lower rates.
Shop for quotes from several companies. You can obtain quotes online or use an insurance broker to obtain multiple quotes quickly. If you use a broker, let him know that you have bad credit. He will be able to select companies that accept credit-challenged applicants. You can then compare quotes and coverages to get the best deal for your money. Make sure you compare policies with similar coverages, so you can make a fair choice.
Ask a captive agent if her company offers “no credit check” auto insurance programs. Some companies offer “no credit check” options, even if they typically use credit scoring to determine acceptability and premium rates. Keep in mind that insurance companies usually charge higher premium rates for “no credit check” programs.
Contact “direct writers,” which provide quotes and sell policies via the telephone or Internet rather than through field agents. Some of these companies do not use credit information when evaluating applicants. This also gives you the advantage of being able to purchase your auto insurance policy without leaving your home or office.
Look for “high risk” insurance companies. These companies specialize in helping consumers with poor driving histories, bad credit and other challenges. Most high risk companies do not pull credit reports. These insurance companies typically charge higher premiums than standard companies, so explore other options before buying a policy from a high risk auto insurer.
Keep your driving record clean. Companies will sometimes accept credit-challenged applicants who demonstrate safe driving skills. A good driving history can help make up for past credit problems.
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