If your credit has taken a few hits, your car insurance bill probably has too. In most states, insurers use a credit-based insurance score to help set your rate, and a lower score can mean a noticeably higher premium for the exact same coverage.
The good news is that prices vary a lot between companies, so shopping around can save real money. As of July 2026, here are the cheapest car insurance options for drivers with bad credit, how credit factors in, and which states ban the practice entirely.
Cheapest Car Insurance for Bad Credit in 2026
Rates always depend on your location, vehicle, and driving history, but some insurers consistently price lower for drivers with poor credit. The table below reflects recent national averages for this group as of July 2026.
| Insurer | Approx. monthly rate (bad credit) | Notes |
|---|---|---|
| Nationwide | About $164 to $165 | Often the cheapest, well below national average |
| GEICO | About $181 | Among the lowest for poor credit |
| USAA | About $199 | Great value, but eligibility limited to military community |
| American Family | Competitive | Another lower-cost option in many states |
Rates are national averages as of July 2026 and will differ for your situation. Always get your own quotes.
A note on USAA
USAA regularly posts some of the lowest rates, including for drivers with weaker credit. The catch is eligibility: USAA is open only to active military, veterans, and their families, so not everyone can buy a policy.
How Credit Affects Your Car Insurance
Most insurers use a credit-based insurance score, which is different from the FICO score a lender sees. Insurers say it helps predict the likelihood of filing a claim, and studies have long shown a statistical link between the two.
In the 46 states that allow it, this score ranks as the second most influential rating factor after your driving record. That is why two drivers with identical cars and clean records can pay very different premiums.
The penalty can be steep
Consumer advocates have found that drivers with poor credit can pay dramatically more than those with excellent credit, even with a spotless driving history. Improving your credit over time is one of the most effective ways to bring your premium down.
Which States Ban Credit in Insurance Pricing
Four states fully ban insurers from using your credit to set auto rates: California, Hawaii, Massachusetts, and Michigan. If you live in one of these, your credit will not affect your premium at all.
As of July 2026, several more states have bills pending that would restrict or ban credit-based insurance scores, including Iowa, New York, Oklahoma, and Pennsylvania. Rules can change, so it is worth checking your state's current law.
How to Get a Better Rate Right Now
You do not have to wait for your credit to recover to save money. A few steps can lower your premium fairly quickly.
First, compare quotes from several insurers, because the spread between the cheapest and most expensive option for bad credit is often hundreds of dollars a year. A comparison tool like Insurify lets you gather multiple quotes at once so you can see who prices you best without calling each company.
Insurify
Insurify
Finding the best insurance shouldn't feel overwhelming. Insurify compares personalized quotes from 120+ top-rated providers in minutes — so you can save up to 50% on auto, home, renters, and pet insurance without the hassle.
Standout feature
Compare 120+ insurance carriers instantly. Save up to 50% on premiums.
Fees
Free
Pros
Compares 120+ carriers in real-time. Save up to 50% on premiums. BBB A+ rated.
Cons
Some users report unwanted communications from third-party providers.
Second, consider insurers known for a straightforward, tech-friendly experience. Lemonade offers auto coverage in a growing number of states with a quick digital quote process, which makes it easy to add to your comparison list.
Lemonade
Lemonade
Insurance that's fast, affordable, and actually feels good. Lemonade uses AI to process claims in seconds and donates leftover premiums to causes you care about. Get renters, home, pet, life, or car insurance — all from one app.
Standout feature
AI claims in seconds. Giveback program donates unused premiums. 2.9M+ customers.
Fees
Varies by policy (renters insurance from ~$5/mo)
Pros
Lightning-fast AI claims processing. Social impact through Giveback program. Beautiful, easy-to-use app (4.9★ App Store).
Cons
Limited home insurance availability (28 states + DC only).
Fix the credit that is driving your rate
Since credit affects your premium in most states, improving it pays off twice, once on loans and again on insurance. Creditship offers free credit monitoring, so you can track your score and watch for errors that may be inflating your rate. Correcting a mistake on your report can help more than people expect.
Creditship
Creditship
Get free credit monitoring and concrete advice how to improve your credit from Creditship AI.
Standout feature
AI Credit Coach. AI analyzes your credit report in depth and gives you tailored, actionable steps to raise your score.
Fees
Free
Pros
Free credit report access plus monitoring and alerts
Cons
No credit repair feature
Other Ways to Lower Your Premium
Beyond shopping around, small adjustments add up. Raising your deductible lowers your monthly cost, though it means paying more out of pocket after a claim.
Ask about discounts for bundling home and auto, safe driving, low mileage, or paying in full. Usage-based programs that track your driving can also reward careful drivers with lower rates over time.
Review your coverage yearly
Rates and your own credit both change, so re-shop at least once a year. The company that was cheapest when you had poor credit may not be the best deal once your score improves.
Next Steps
Gather quotes from a few insurers, including lower-cost options like Nationwide and GEICO, and use a tool like Insurify to compare several at once. If you are eligible, check USAA, and keep an eye on your state's rules if it is weighing a credit ban.
Meanwhile, work on the credit that shapes your rate, using free monitoring from a service like Creditship to track progress. This article is general information, not individualized financial advice, and your actual rate depends on many personal factors.
Frequently Asked Questions
Which car insurer is cheapest for bad credit?
As of July 2026, Nationwide often posts the lowest rates for drivers with bad credit, around $164 to $165 a month, with GEICO close behind near $181. USAA is also very competitive at about $199, but only military members, veterans, and their families are eligible.
Why does credit affect my car insurance rate?
Most insurers use a credit-based insurance score, which they say helps predict how likely a driver is to file a claim. In the 46 states that allow it, this score is the second most influential factor after your driving record, so weaker credit can raise your premium.
Which states ban credit-based car insurance pricing?
California, Hawaii, Massachusetts, and Michigan fully ban insurers from using credit to set auto rates. Several other states, including Iowa, New York, Oklahoma, and Pennsylvania, have bills pending as of July 2026 that would restrict or ban the practice.
Can I lower my rate without improving my credit?
Yes. Comparing quotes across insurers, raising your deductible, and stacking discounts for bundling or safe driving can all reduce your premium. Using a comparison tool like Insurify helps you find the cheapest option quickly while you also work on your credit.
