The Insurance Information Institute shows that drivers with lower credit scores are more likely than others to file a claim with car insurance providers. Your credit score will impact the price of your premium, even if you don’t live in California, Hawaii, or Massachusetts. It isn’t as easy as just looking for a company that offers low credit car insurance.
Car insurance with poor credit is the best in North Carolina
North Carolina residents with poor credit pay $1,758 per year for car insurance. This is $84 less than the national average of good credit, but $433 more than that of the state average for good.
Your credit score is not what insurance companies use to determine your rate. Your credit-based insurance score is what they look at. Your credit-based insurance score, like your credit score, is based on information from your credit reports (issued via the Big Three — Equifax and TransUnion). This means information about your payment history, debt, and credit usage will all be used to determine your insurance score.
Depending on your credit score, you could be either:
- Poor
- Average
- Good
- Excellent
Your credit score is different from your insurance score. It can prevent you from getting loans or lines of credit. While your insurance score won’t prevent you from getting coverage, it might mean that you pay more for financial protection than others.
What does North Carolina’s credit score have to do with my car insurance rates?
It is not clear why drivers with lower credit scores are more likely than others to cause accidents. However, this is supported by studies. According to the Texas Department of Insurance, a study was published in 2004. This was followed by a supplement in 2005. Both studies showed a clear correlation. The FTC also released an 2007 study. A MetLife study was cited in the FTC report. It found that drivers with low credit scores were at 50% higher risk than others.
Drivers with good credit scores may need to wait until their premium becomes more affordable because most drivers have either a 6-month or 12-month policy. Many drivers choose to switch providers instead. Every insurance company reviews every application to determine a premium. This is why many drivers choose to change companies.
What are other factors that impact North Carolina’s auto insurance rates?
Your credit score and insurance history are all factors that determine the true cost for car insurance. These are the most important:
- Metro or state: Your zip code may affect your premium. Often, certain zip codes have higher claims than others. It doesn’t matter what type of claim you have (natural disasters or accidents, theft, etc.). It doesn’t matter what claim type you have, insurance companies spend a lot of money there. Many people can save money simply by moving to a different zip code. Drivers who move from Tampa to Orlando, for example, see an average drop in their premium of $450.
- Car: Insuring a high-end vehicle will cost you more than an average car. An example of this would be a BMW 330i versus a Honda Odyssey. Insure the former for an average of $2225 per year, while the latter costs only $1,454.
- Driving record: Speeding, DUIs and at-fault crashes are all considered high-risk behavior by insurance companies. These factors can have a significant impact on how much you pay to insure your vehicle, regardless of your coverage level.
How to get affordable car insurance in North Carolina even if you have poor credit
While your long-term goal should be to improve credit and maintain a clean driving record, there are things you can do to reduce your car insurance premium. Take a look at these:
- Shopping around: While every company uses the same information to calculate a premium, each company weighs each factor differently. While a low credit score can affect your premium with most insurance companies but not all companies will penalize you, You can save significant money by switching to a different provider. One driver might not have the best company , but another may.
- Compare discounts: North Carolina car insurance for bad credit can often be redeemed with a few discounts. While some companies may be more expensive than others, others offer greater savings with the same discount. Compare two companies and pay close attention to the best discounts you can get today, as well as those you could benefit from a bit later on if you do a bit more work.
- Increase your deductible: While a high deductible will reduce the monthly amount you pay, it will also lower the amount that you receive after an accident. You may not want the highest possible deductible. Talk to an agent about your coverage and budget in order to determine the best deductible.
Questions frequently asked
When I apply for insurance, will I be subject to a credit check?
If you apply for a loan, or line of credit, credit checks will only affect your credit score. An insurance company will not run a credit check on your credit because you aren’t looking for money. This is what separates a soft credit and hard credit check. A soft credit check is necessary to protect your credit score.
What is the best place to find affordable car insurance in North Carolina for people with bad credit?
It is best to compare insurance companies to find the best car insurance for people with poor credit. Your credit score may only be one of many factors that affect your car insurance premium. It might not have an impact on it as much as other variables. To find car insurance that is cheaper, you can use the strategies described above.
