Search Cars for Sale

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

The cost of car insurance is a greater factor than ever when trying to fit the cost of a new car into your budget. After spending hours researching the ideal car to purchase, it’s not time to power down the laptop. Now to the task of finding the best insurance coverage. But as you compare coverage and premiums, be aware, 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 2018 Credit Scores & Auto Insurance 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 67 percent more for car insurance than people with excellent credit. On average, those with no credit history fork over at least twice as much in New Jersey, and and nearly twice as much in several states including Arizona, Colorado, Michigan, Texas and Wisconsin.

Only in Hawaii and Massachusettes are consumers not penalized for their credit scores when buying car insurance.

WalletHub looked at the five main insurance companies: GEICO, Progressive, State Farm, Allstate and Farmers Insurance. On average, these companies use credit data in 81% of the states in which they operate. (Delete!)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. GEICO is least reliant with an average 24-percent penalty.

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 20 percent; you’d save 43 percent at Progressive; 44 percent at State Farm, 44% at Allstate and a hefty 54% 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.

 

 

Sign up for Autotrader newsletters

The best cars and best deals delivered to your inbox

Email Address 

By subscribing, you agree to our privacy policy

Where You Can Buy

Loading dealers...

2 COMMENTS

  1. It goes to show how stupidity is playing a major role in our country today.

    Just because a person decides not to utilize credit doesn’t mean they are not responsible, it’s quite the contrary.
    As I heard from a get out of debt guru “ the credit score is a I love debt score because you have to utilize credit to increase your credit score.
    It’s time that these so called establishments start using their head and figure out another way to judge a persons responsibly when it comes to employment as well as getting car insurance.
  2. What ever happened to just using your driving and claims record ? Another way to charge you more for car insurance.

Leave a Comment

Most Popular Articles

2020 Hyundai Sonata Hybrid: First Look

The 2020 Hyundai Sonata Hybrid jumps to the head of the hybrid class.

Best Truck Deals: May 2021

These are the best deals on trucks for the month of May.

Search By Style

More Articles Like This