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No credit check car insurance is becoming more popular especially given the amount of American consumers with credit problems today. Credit scores were introduced as part of the car insurance risk formula around a decade ago much to the frustration of many drivers. After all, how does your credit score reflect your driving skills?
In reality there is no direct correlation between how well you drive to your credit score but car insurance rates are not based on your driving skills. They are based on the simple risk question:
What are the chances of you filing a future claim?
Car insurance companies commission many studies and data has shown that drivers with poor credit scores are more likely to file a claim. This actually makes some sense if you think about it.
- Drivers with poor credit scores generally have less savings and limited access to credit.
- For smaller accidents drivers with poor credit may opt to file a claim, even for a few hundred dollars. (Whereas a driver with more resources may pay for damages out-of-pocket without filing a claim)
While there are some state laws which prevent the use of credit scores in calculating car insurance rates you can bet insurers find some way around this to adjust for the higher risk.
How much is car insurance with no credit check?
If you need a car insurance policy with no credit check your rates will almost always tend to be higher. For existing policyholders its rare for car insurance companies to run your credit for a new policy but if you are shopping around for new auto insurance it will take a little more time to find the best rates.
No credit check car insurance rates can often be 60% or higher than typical premiums and are many times only offered by providers who specialize in high risk insurance. While a poor credit score certainly should not group you in the same category as a driver with a DUI conviction your options could be limited (depending on where you live) if you insist on no credit check car insurance.
What is bad credit?
Before searching for no credit check car insurance you should never assume your credit score is bad enough to have car insurance denied. Many drivers report that a bad credit score is often overlooked with a good driving record from a lot of respectable insurers. It really depends on your profile.
Always remember that credit cards and car insurance are different products. If you were denied for a home loan, a credit card or even a student loan due to poor credit this does not automatically mean all car insurance companies will deny your application. You should always apply to any car insurance company regardless of your credit score. Many times a bad credit score may add a small premium or prevent you from getting a discount but you will still be offered affordable rates without having to expose yourself to the sub-prime car insurance companies.
Credit scores are a result of analyzing your credit history. This involves payment patterns, credit limits, use of credit, and amount of available credit, public records and more. While there are 3 main credit reporting agencies (Equifax, TransUnion and Experian) most car insurance companies only pull credit from one agency. You should always order a copy of your credit report and credit score before applying for car insurance and submit a dispute for any information you feel is wrong.
Still need No Credit Check Insurance?
Car insurance is always available. Even for drivers who have been continuously denied coverage there are state programs which assist high-risk drivers obtain coverage. If you need no credit check insurance the best way is to compare auto insurance online as many insurers offer no credit check programs but do not promote them.
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