Having bad credit can make many things harder—car insurance is no exception. While your driving history is the most important factor in determining insurance rates, in many Tier 1 countries like the United States, Canada, and the UK, your credit history may also influence how much you pay.
But don’t worry—there are still reliable and affordable car insurance options for drivers with poor or limited credit history. This guide will walk you through how credit impacts insurance in these countries, the best insurers to consider, and strategies to help you save on premiums even if your credit score is less than perfect.
Does Credit Affect Car Insurance Rates?
United States
Yes. In most U.S. states (except California, Hawaii, and Massachusetts), insurers use a credit-based insurance score to help determine your premiums. Studies show a correlation between poor credit and higher claims, so insurers may charge more if your credit is low.
Canada
Yes, but it depends on the province. Some allow insurers to use credit scores (e.g., Alberta, Ontario), while others (like Newfoundland and Labrador) restrict or prohibit it. If allowed, insurers must usually obtain explicit consent before pulling your credit file.
United Kingdom
No. UK insurers do not use credit scores to calculate your car insurance premium. However, your credit may affect your ability to pay by monthly installments. A poor credit rating may lead to higher interest rates or require you to pay the full annual premium upfront.
Best Car Insurance Companies for Bad Credit Drivers
United States
GEICO
- Offers competitive rates even for those with poor credit.
- Discounts available for good drivers, multiple vehicles, and bundling with renters/home insurance.
- Strong online platform and 24/7 support.
Progressive
- Known for leniency toward drivers with lower credit scores.
- Snapshot® program rewards safe driving, helping reduce rates.
- Offers flexible payment plans and several discount opportunities.
State Farm
- While they do use credit, their Steer Clear® and good driver programs can offset higher premiums.
- Great for young drivers with bad credit.
- Strong network of agents for in-person support.
Nationwide
- Offers personalized rates through telematics and rewards safe drivers.
- Reasonable rates for drivers with fair-to-poor credit.
- Strong customer service and digital tools.
Canada
The Co-operators
- Provides flexible coverage, with or without a credit check.
- Offers bundling discounts for auto and home insurance.
- Strong reputation for customer service.
Belairdirect
- Competitive for drivers with weak credit, especially when bundled with property insurance.
- Known for customizable coverage and flexible monthly payment options.
Intact Insurance
- One of Canada’s largest insurers, offering options for those with imperfect credit.
- Discounts for enrolling in their usage-based insurance program (my Drive®).
- Bilingual customer service across provinces.
Aviva Canada
- Transparent about credit usage—will only access credit with your permission.
- Offers flexible monthly payments and forgiving policies for high-risk drivers.
United Kingdom
Admiral
- Does not use credit scores for pricing but may check credit for payment plans.
- Offers black box (telematics) insurance for young or high-risk drivers.
- Competitive multi-car discounts.
Direct Line
- Often cheaper when you buy direct—especially if you’re paying annually.
- Doesn’t rely on credit scores, focuses on driving history and claims record.
- Offers breakdown cover, legal protection, and no-claims bonus protection.
Aviva UK
- Offers pay-as-you-go plans and telematics-based policies.
- Flexible options for those who prefer to pay annually or in installments.
- Ideal for high-risk drivers or those with previous financial difficulties.
How to Lower Car Insurance Costs with Bad Credit
Compare Quotes Regularly
Prices vary widely by insurer—get quotes from multiple providers in your country to find the best rate.
Choose Usage-Based Insurance
Telematics programs like Progressive’s Snapshot (US), my Drive® from Intact (Canada), and Aviva Drive (UK) track your real-world driving habits. If you’re a safe driver, you could see major savings.
Increase Your Deductible
Raising your deductible (the amount you pay before insurance kicks in) lowers your premium. Just ensure you can afford it if you need to make a claim.
Drive a Safe, Modest Car
Cars with good safety ratings and low repair costs are typically cheaper to insure. Avoid luxury or high-performance vehicles.
Bundle Policies
If you need renters, homeowners, or life insurance, bundling with the same provider often gets you a discount.
Pay Annually if Possible
Especially in the UK and Canada, monthly payments may include added interest or require a credit check. Paying in full can save you money.
Ask About Discounts
You may qualify for:
- No-claims bonus
- Good student discount
- Multi-car or family policy discounts
- Low-mileage discount
- Defensive driving course completion
Which States and Provinces Don’t Use Credit?
- USA: California, Hawaii, Massachusetts do not allow credit-based insurance scoring.
- Canada: Newfoundland and Labrador prohibits credit use; others require consent.
- UK: No credit-based pricing allowed.
Ashish Rai is a professional automotive writer with four years of experience crafting reviews, features, and technical guides. Passionate about vehicles, he translates complex engineering concepts into engaging content. Covering market trends, EV developments, and driving experiences, Ashish delivers insightful, reader-friendly articles that ignite automotive enthusiasm worldwide consistently with integrity.
