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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: tdub303/Getty Images January 11, 2022 Lizzie Nealon is an insurance contributor for Bankrate and enjoys making home, auto and life insurance digestible for readers so they can prepare for the future. Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand. Bankrate logo The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo Editorial integrity
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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Insurance companies decide your premium using an algorithm that determines the risk of providing insurance products to you. The higher the risk to insure you, the more expensive your policy will be. If your risk assessment exceeds a certain level, the company may reject your application entirely. But how do insurance companies determine your risk level? Insurance providers determine your level of risk through algorithms that analyze your personal characteristics. Depending on the state’s regulations and the insurance company’s specific practices, underwriters may consider an applicant’s age, ZIP code, driving or medical history, claims history, credit history, gender, and more. After analyzing these characteristics, the company assigns a to you, corresponding to how likely you are to file a claim. Note that certain states prohibit the use of age, gender, or credit score in determining an applicant’s premium. worry that assigning credit-based insurance scores disproportionately disadvantages low-income households and marginalized communities. According to a 2021 survey published by Credit Sesame, Black and Hispanic Americans were shown to have lower credit scores than white and Asian Americans. When lower-income Americans who have poor credit scores according to FICO have to pay a higher insurance premium, they may make the difficult choice to drive without insurance due to the financial strain. In fact, a from the Consumer Federation of America states, “The cost of state-mandated basic liability insurance is higher than many lower-income Americans can afford, and the number of uninsured citizens in this category is higher than the national average as a result.” What is the impact of using credit-based insurance scores
Since credit-based insurance scores can lead to adverse outcomes for certain groups, several lawsuits and legislation have emerged regarding the issue. A recent court case in the state of Washington explored the issue of using credit history as a rating factor. During the pandemic, Washington State Insurance Commissioner Mike Kreidler issued an emergency ban on credit scoring for insurance pricing. Several insurance groups sued, stating that Kreidler’s emergency order was invalid since, they argued, the pandemic did not meet the criteria necessary to be considered an emergency. A Washington judge ruled in favor of the insurance industry and reinstated the use of credit scoring. After Kreidler lost the court battle, he backed a state bill through the legislature meant to ban the use of credit scores. However, the bill failed. Finally, in August 2022, a court ruled that credit could be used as a rating factor and that Kreidler in issuing a temporary ban. Kreidler has stated that he will not appeal the decision, so it’s likely that credit will remain a legal rating factor in Washington State. Similarly, in 2021, the Colorado Senate banning insurance companies from using consumer data in ways determined to be “unfairly discriminatory” when calculating insurance premiums. As these debates heat up, you may want to keep track of whether your state legislature is considering a ban on credit scoring. A credit ban on the insurance industry may be beneficial to consumers who: Are members of low-income households: Nearly of U.S. adults are part of a lower-income household. They are to have poor or no credit history, which may make it difficult to find affordable insurance products. Eliminating credit scoring could help these individuals get better rates. Are a member of certain marginalized groups: Black and Hispanic Americans, on average, have lower credit scores and more frequent instances of no credit history compared with other racial groups, according to CNBC. As a result, Black and Hispanic Americans may be paying more than their Asian American and white American counterparts for the same insurance product. A ban on credit scoring may help equalize average insurance premiums across racial groups. Have little to no credit history: If you’re credit invisible (sometimes referred to as a “credit ghost”), you may still be great with your money, but your insurance company may be suspicious of your no-credit past. You may be able to get a lower insurance rate if your state prohibits credit scoring. Have poor credit: Regardless of your income level, a poor credit score can make it hard to find affordable insurance. If you have great claims history but your credit score is holding you back, your state eliminating the use of credit scoring could help you. Why and how to get your annual free credit report
Before getting a , you may want to know what your credit report contains. Credit reports contain four parts: Personal information Credit account history Credit inquiries Public records If lenders or companies conduct a “hard inquiry” on your credit history, your credit score can decrease. However, most will complete a “soft inquiry,” which does not affect your score. Once a year, you can pull your to see where you stand. Federal law protects your ability to pull this credit report without affecting your credit score. You may want to pull your credit report to see if there are any errors on it and make corrections to it. This free credit report is not the same thing as free credit scores. Unlike with your credit report, you are not entitled by law to see your credit score free of charge. If you’re interested in checking your credit score for free and without affecting your score, you may want to consult a guide on . How your insurance score affects your car insurance premium
Insurance companies view your credit-based insurance score as an indicator of how likely you are to file a claim. Statistically, policyholders with a poor insurance-based credit score are more likely to file claims, according to the . Insurance companies in the following states are prohibited from using your credit score as a rating factor. California Hawaii Massachusetts Michigan While your car insurance rate depends on multiple factors, it may be helpful to see the in each state based on your credit tier. Annual full coverage premium by state and credit rating (excludes states that do not allow credit as a rating factor) Poor Average Good Excellent State car insurance laws Alabama $3,108 $1,900 $1,623 $1,540 Alaska $2,265 $1,730 $1,559 $1,497 Arizona $2,804 $1,764 $1,547 $1,423 Arkansas $3,461 $2,146 $1,914 $1,660 Colorado $3,321 $2,213 $2,016 $1,679 Connecticut $2,967 $1,794 $1,845 $1,344 Delaware $2,987 $1,954 $1,775 $1,509 Florida $5,817 $3,032 $2,364 $2,161 Georgia $3,143 $2,200 $1,982 $1,859 Idaho $1,748 $1,217 $1,045 $1,019 Illinois $2,622 $1,653 $1,485 $1,243 Indiana $2,621 $1,480 $1,254 $1,099 Iowa $2,365 $1,408 $1,260 $1,087 Kansas $3,165 $1,924 $1,698 $1,521 Kentucky $4,128 $2,533 $2,128 $1,934 Louisiana $4,630 $3,032 $2,724 $2,410 Maine $1,425 $913 $965 $765 Maryland $2,935 $1,958 $1,877 $1,565 Minnesota $3,087 $1,822 $1,643 $1,445 Mississippi $2,685 $1,893 $1,782 $1,552 Missouri $2,829 $1,865 $1,661 $1,463 Montana $2,894 $1,913 $1,737 $1,560 Nebraska $2,862 $1,697 $1,531 $1,293 Nevada $3,275 $2,404 $2,245 $2,044 New Hampshire $2,174 $1,312 $1,275 $945 New Jersey $3,307 $1,979 $1,757 $1,384 New Mexico $2,534 $1,560 $1,419 $1,300 New York $4,876 $2,585 $2,321 $1,935 North Carolina $1,758 $1,451 $1,325 $1,352 North Dakota $2,388 $1,474 $1,264 $1,107 Ohio $2,075 $1,231 $1,034 $960 Oklahoma $3,024 $2,054 $1,873 $1,680 Oregon $2,288 $1,539 $1,346 $1,245 Pennsylvania $2,553 $1,791 $1,476 $1,507 Rhode Island $3,090 $2,132 $2,018 $1,664 South Carolina $2,775 $1,646 $1,512 $1,250 South Dakota $3,139 $1,896 $1,642 $1,422 Tennessee $2,416 $1,531 $1,338 $1,174 Texas $3,053 $2,106 $1,823 $1,663 Utah $2,369 $1,477 $1,306 $1,144 Vermont $1,873 $1,209 $1,207 $982 Virginia $2,300 $1,425 $1,304 $1,083 Washington $1,816 $1,318 $1,176 $1,054 Washington, D.C. $3,072 $2,062 $1,855 $1,711 West Virginia $2,635 $1,741 $1,499 $1,355 Wisconsin $5,440 $1,345 $1,186 $1,010 Wyoming $2,357 $1,567 $1,495 $1,229 Tips for finding competitive car insurance rates even with poor credit
If you have poor credit, you’re not alone. In fact, of Americans have credit in the “poor” range, according to FICO. Even with a below-average credit score, a little research can help you find car insurance rates that fit your budget. Here are a few tips to help you find the best car insurance for your wallet: Shop around with different providers: Insurance companies each use different algorithms to determine your insurance score. One company might place more weight on your credit score, while another might care more about your driving history. For this reason, different companies will typically offer you different rates. You may want to from several of the before making your choice. Research local, independent, and minority-owned insurance agencies: Insurance agencies represent multiple providers and may be able to point you to the best insurance for your individual needs. Instead of finding quotes from multiple companies on your own, an insurance agency does the work for you. See which discounts apply to you: Insurance companies offer various discounts and often allow you to mix and match these deals. For this reason, you may want to find the insurance company with the most discounts that apply to you. Talk with an independent insurance agent: Like agencies, independent insurance agents can talk with you about your needs and budgetary restrictions to help find coverage that’s right for you. They can also point you to discounts that might apply to you. Keep a clean driving record: Car accidents and filing claims can increase your insurance premium significantly. If you can, keeping a clean driving record is one of the best ways to keep your rates low. If you’re buying a new vehicle, consider its features: If you’re considering buying a new vehicle, car insurance companies often give discounts if your vehicle comes equipped with certain safety features such as anti-lock brakes and anti-theft systems. Work to improve your credit score: Improving your credit score may take some time, but it’s certainly possible and something you may want to consider if your state allows insurance companies to use your score as a factor. You may want to focus on catching up on any past-due payments, making future payments on time and limiting how much you apply for new credit cards or accounts. Available resources
: This government site walks you through what credit reports, credit scores and credit freezes are. It also shows you how to obtain your credit report and make corrections to it. : This checklist may help you learn new ways to improve your credit score. : This government site walks you through your rights regarding personal debt and credit and gives you resources to understand and get help with credit repair. : This site helps those living paycheck to paycheck find a credit counselor that can help them improve their credit. : Bankrate’s tools can help you manage your credit, from showing you how to generate a building your credit to : This Insurance Directory provides a list of State Insurance Organizations. : This site provides resources, including information about unemployment insurance. Methodology
Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits: $100,000 bodily injury liability per person $300,000 bodily injury liability per accident $50,000 property damage liability per accident $100,000 uninsured motorist bodily injury per person $300,000 uninsured motorist bodily injury per accident $500 collision deductible $500 comprehensive deductible To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually. These are sample rates and should only be used for comparative purposes. Credit: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit the use of credit-based insurance scores as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts and Michigan. SHARE: Lizzie Nealon is an insurance contributor for Bankrate and enjoys making home, auto and life insurance digestible for readers so they can prepare for the future. Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand. Related Articles