Most insurance companies review credit history when issuing car insurance policies. This makes getting car insurance quite hard for most drivers. Credit history checking helps the insurer confirm your ability to pay premiums. While we have this, can you get car insurance with no credit history? It is quite important to check if there are car insurance companies that do not check credit history before selling premiums.
Credit history is one of the many factors that affect your car insurance premiums. Due to bad credit scores, most car insurance companies conclude that the driver would be unable to pay premiums, and for that reason, they do not issue premiums. Having good credit gives a higher chance of getting better insurance rates as well as approval.
Before purchasing car insurance with bad credit, there are different factors you need to consider. One of these factors is whether or not the insurance company offers auto insurance with no credit history. However, this write-up contains every piece of information on whether you can get auto insurance with no credit history or not.
How Car Insurance Companies Use Credit History
How car insurance companies use credit scores depends on where you live. In some states, car insurance companies use a driver’s history to determine what coverage a driver needs along with insurance rates. During this process, most drivers with no credit are considered high-risk and are not granted coverage. Car insurance companies use credit scores to access the following information:
- Check out the types of loans you have taken.
- How long have the loans been?
- How much debt do you owe?
- Your debt repayment history.
In cases where you do not have any credit history. The car insurance company will be unable to draw this information. However, while there are car insurance companies that check credit history by issuing insurance coverage. Others use other factors to determine insurance rates and quotes.
Why Do Car Insurance Companies Check Credit History?
Car insurance companies check credit history because drivers with no or bad credit history are considered to file claims more than often, which is a high risk. To avoid risks, insurance companies check the credit history of every driver while determining insurance rates and quotes.
Also, through this process, any driver with a bad or no credit history is charged higher insurance rates to lessen their risks. However, aside from this, as mentioned earlier, car insurance companies consider other factors like age, location, driving record, and others when determining car insurance rates.
Insurance Companies That Do Not Check Credit History
As previously stated, other auto insurance companies do not require a credit history when determining insurance rates; instead, they consider other factors. Auto insurance companies like CURE, Empower, and Dillo offer car insurance to drivers with no credit assessment. The following are two types of car insurance companies that do not require credit score when selling insurance policies.
- Usage-based Insurance:
This type of car insurance can be gotten from insurance companies like Metromile, SmartMiles offered by Nationwide, Root Insurance, and Milewise offered by Allstate.
- Telematics Insurance:
This type of car insurance is offered by State Farm Drive Safe and Save, and Geico DriveEasy. Also, Nationwide SmartRide, Progressive Snapshot, Farmers Signal, and Allstate Drivewise.
If you reside in a state where car insurance companies must review your credit, finding an insurance company that does not check credit scores will be very hard to do. This is because checking your credit has been made mandatory.
How to Get Auto Insurance With No Credit History
After being aware of how your credit history is used by insurance companies, you need to work towards preventing your credit from affecting your insurance approval and rates. Consider getting auto insurance from companies that do not review credit history when determining insurance rates.
In cases where you have no credit score and you are approved for car insurance. You are likely to face high rates. Here, you can search for much more affordable rates and even take advantage of discounts by comparing rates and checking discounts from different insurance companies. Sometimes, paying off outstanding debts is another way to get approved for car insurance as well as affordable rates.
Can You Get Car Insurance With No Credit History?
It is possible to get car insurance even if you do not have a credit history. However, you are likely to face higher premiums and insurance rates.