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Shopping for Car Insurance? Expect to Pay More If You Have Zero Credit

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author photo by Lindsay Martell July 2017

Once summer kicks into high gear, folks don't just hit the beach -- they also start shopping for a new car. But even if you've done a ton of research and have your heart set on the ride of your dreams, getting car insurance may not be super-simple if you have zero (or less-than-stellar) credit.

The researchers at WalletHub released a new report detailing how tough it can be to get good rates on insurance if you have no credit -- something that car buyers may overlook when they visit a dealership.

In the 2017 Auto Insurance & Credit Scores Report, finance experts examined to what extent major auto insurers use credit data when pricing policies. They found that on average, people with no credit pay 65% more for car insurance than people with excellent credit. Those with no credit history fork over at least twice as much in Pennsylvania, New Jersey and Michigan.

WalletHub looked at the five main insurance companies: GEICO, Progressive, State Farm, Allstate and Farmers Insurance. On average, these companies use credit data in 90% of the states in which they operate. Only Progressive uses credit data in all of the states it serves.

As for who depends on credit the most? Farmers Insurance appears to be most reliant on credit data, with credit newcomers paying over twice as much as customers with excellent credit.

Travelers is the most transparent about its use of credit data, as it provides a clear disclosure when generating quotes.

Here is a breakdown showing how much top-notch credit saves you on insurance:

GEICO offers would-be customers with excellent credit a savings of 29%; you'd save 35% at Progressive; 37% at State Farm, 44% at Allstate and a hefty 50% at Farmers Insurance.

Researching your next vehicle isn't just about gas mileage, safety ratings and affordability anymore. Factoring in car insurance and how your credit stacks up may take a little extra time, too.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Shopping for Car Insurance? Expect to Pay More If You Have Zero Credit - Autotrader