Insuring drivers can be a gamble for insurance companies, so to determine if potential customers are an insurance risk, providers use credit ratings before extending coverage. In the past, this practice made obtaining auto insurance difficult for customers with poor credit histories. All states require that automobile owners possess some form of auto insurance, and even if your credit rating is spotty, there are now multiple alternatives for obtaining car insurance.
Establish you are a low risk
Insurance companies have gathered and studied poor driving skills and accident proneness in correlation with poor credit ratings for decades. From the auto insurance industry's perspective, good credit shows that consumers not only pay their bills on time, but it indicates that they are less likely to cause auto accidents, and this idea works in reverse for consumers with poor credit. However, there are other ways to demonstrate that you are a low-risk customer. If your driving record is clean or your poor credit rating isn't the result of late car payments, you can use these indicators as proof of your financial responsibility, according to Cars Direct.
High-risk insurance providers
To fill the needs of high-risk auto insurance consumers, some auto insurance companies offer no-credit check insurance options. Well-recognised auto insurers like Allstate use elements from credit histories to determine auto insurance rates, as opposed to using credit scores as the sole determining factor. In some states, such as Texas, if two or more auto insurers refuse to provide coverage, you can purchase liability or personal injury coverage from the state insurance association. Contact your state insurance agency to find out if it provides this type of service. If it does not, it can provide a list of companies that offer no-credit check car insurance.
If you are unable to secure a no-credit check auto insurance policy or alternative option, you may still be able to find coverage. Some auto insurers provide coverage to consumers in spite of their credit history if they agree to pay the policy in full at the time of purchase. However, there are few high-risk customers who can realistically pursue this option.
Understand that even though no-credit check insurers are providing coverage, they still consider customers with poor credit a high risk. As a result, these companies tend to charge their customers higher premiums and fees. If you must go the no-credit check route, is important to comparison-shop for quotes from several companies and ask if you qualify for discounts before selecting an insurance provider.