Can you be denied auto insurance for bad credit?

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The good news is that in states that allow your credit score to be used to determine auto insurance eligibility, this usually cannot be the sole reason for denial of coverage. However, your credit score can influence your insurance costs. But what does your credit score have to do with insurance?

Your credit score and insurance coverage

An insurance company can deny your request for coverage for many different reasons. If you have too many speeding tickets, for example, you may be considered high risk for filing a claim. Your age and marital status may also have a say, because statistically, a 40-year-old married person may be a less risky driver than an 18-year-old single. Insurance companies can even use the age and condition of your vehicle to determine your rates.

However, if you are denied coverage, it is usually for several reasons. When it comes to making payments and filing a claim, some insurance companies may also be concerned about your credit history.

According to Experian, your credit-based insurance score is based on your credit reports and used to determine your likelihood of filing a claim. However, even if you live in a state that allows insurance companies to use credit scores to determine insurance costs, state insurance regulators generally do not allow providers to deny credit. coverage of a borrower solely on the basis of a bad credit rating.

During the underwriting process, when the insurance company determines your potential rates and based on your home state, an insurance company may use your credit score to determine your eligibility for coverage. For many insurance companies, a bad payment history on your credit reports could represent a higher risk for filing a claim or missing an insurance payment in the future.

Which States Are Not Using Your Credit Score?

States vary in their insurance regulations. Here are the states that don’t allow your credit score to influence your auto insurance coverage, according to Experian:

  • Michigan
  • Massachusetts
  • California
  • Oregon*
  • Utah**

* Although your credit score cannot be used as a reason to decline or renew an insurance policy, they can still use your credit score in part to determine your rates.

** May use your credit score to determine your rates, but this cannot be the only factor during the underwriting process.

If you are looking for insurance for your next vehicle, visit our resource center to compare insurance rates.

Are you looking for an auto loan with bad credit?

Insurance companies may be able to charge you more if your credit rating is bad, and auto lenders may decline a car loan if your credit rating does not meet their requirements. If you are in need of an auto loan with bad credit then we want to help!

Auto Express Credit has created a nationwide network of special finance dealers who help borrowers facing credit problems. Fill out our free auto loan application form and we’ll use our network to find a dealership in your area.


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