Updated: March 17, 2026
Advertising & Editorial Disclosure
Poor credit raises the average full coverage car insurance rate by $3,838 per year compared to good credit.
The insurer you choose determines how much your credit tier costs. For drivers with poor credit, GEICO charges an average of $212 per month and State Farm charges $590 per month for identical coverage — a $378 per month gap for the same driver profile.
Improving your credit score can help you find lower car insurance costs. In California, Hawaii, Massachusetts and Michigan, credit-based pricing is prohibited entirely.
Poor credit drivers pay $3,838 more per year — $5,435 vs. $1,597 for those with good credit — for the same full coverage policy, according to MoneyGeek's analysis. Credit score is one of the most impactful rate factors in most states.
Shopping and comparing quotes is the fastest way to cut costs with poor credit. GEICO charges $212 per month and State Farm charges $590 per month for identical coverage on the same driver profile, a gap of $378 per month.
Certain factors determine how much your credit score raises or lowers your car insurance premium.
For drivers with poor credit, State Farm charges an average of $590 per month and GEICO charges $212 per month for identical coverage, a $378 per month difference. This gap reflects each insurer's internal credit weighting model. Shopping and comparing quotes before every renewal is the most effective way to avoid overpaying at any credit tier.
Poor credit drivers with full coverage pay $320 per month more than good credit drivers at the national average. For minimum coverage policies, the dollar gap narrows, but the percentage surcharge persists. The right coverage level matters especially for drivers whose credit score is already raising their base rate.
California, Hawaii, Massachusetts and Michigan bar auto insurers from using credit scores to set rates. Drivers in these states pay identical rates regardless of credit tier. If you live in one of these four states, your credit score has no effect on your auto insurance premium.
Moving from poor to good credit eliminates $3,838 in annual surcharges at the national average. Auto insurers re-check credit at each policy renewal, typically every six or 12 months. Credit improvements made between renewals appear on the next policy term, not mid-policy.
Auto insurers use a soft credit inquiry when checking your credit for a quote or renewal. Soft inquiries do not appear on your credit report and have no effect on your credit score. You can compare quotes from multiple insurers in a single afternoon without any credit impact.
The table below shows how each credit tier affects annual car insurance costs, based on MoneyGeek's analysis of full coverage rates for a clean-record adult male driver. The largest gap falls between poor and good credit at $3,838 per year. Drivers with excellent credit save $187 per year compared to good credit.
Credit Score | Average Monthly Premium | Average Annual Premium | vs. Good Credit |
|---|---|---|---|
Excellent | $118 | $1,410 | -$187 |
Good (baseline) | $133 | $1,597 | $0 |
Fair | $204 | $2,444 | +$847 |
Below Fair | $286 | $3,429 | +$1,832 |
Poor | $453 | $5,435 | +$3,838 |
For drivers with poor credit, rates vary widely by insurer because each company weights credit differently. These five steps can help reduce what you pay.
Because insurers weight credit differently, shopping before every renewal is the fastest way to find a lower rate and determine the cheapest car insurance company for your profile. Rates for the same driver profile can vary by hundreds of dollars per month depending on the insurer.
Some insurers weigh credit less heavily in their rating models. Nonstandard writers may not use credit scoring at all. See insurers that don't check credit scores for a list of options.
Moving from poor to good credit eliminates up to $3,838 per year in surcharges. Paying down credit card balances below 30% utilization, disputing credit report errors and avoiding new hard inquiries in the six months before renewal are the fastest ways to improve your score. Insurers re-check credit at each renewal, so improvements show up on the next policy term.
Raising your deductible from $500 to $1,000 can reduce premiums by $15 to $30 per month for drivers with poor credit paying $453 per month. The tradeoff is higher out-of-pocket costs at claim time, so make sure you can cover the higher deductible before making this change.
Credit and driving record surcharges compound to affect car insurance costs. A poor credit driver with a DUI pays far more than either factor would cost alone, so keeping a clean record prevents the two largest rate factors from stacking.
State law determines whether your credit score can affect your car insurance rate at all. California, Hawaii, Massachusetts and Michigan ban credit use entirely — drivers in those states pay rates based on driving record, vehicle and location only. Maryland allows insurers to use credit at policy issuance but must re-rate the policy if the driver's credit improves. Oregon permits credit use when issuing a new policy but prohibits credit-based repricing at renewal for existing policyholders.
Insurance companies use a soft inquiry, not a hard pull. Soft inquiries do not appear on your credit report and do not affect your score. You can compare quotes from multiple insurers in one afternoon with zero credit impact.
Most insurers re-check credit at renewal, which occurs every 6 or 12 months. Credit improvements apply on the next policy term, not mid-term.
No. Credit improvement removes the credit surcharge at renewal, but a violation surcharge remains on your record for three to five years. Both factors act independently.
No. California prohibits credit-based pricing. Rates are set on driving record, years of experience and miles driven.
Both surcharges apply, and they compound. A poor-credit driver with a DUI pays the poor credit baseline of $453 per month plus the DUI surcharge on top. Shopping across multiple insurers is especially critical when multiple factors apply.
MoneyGeek sourced rate data from Quadrant Information Services using a baseline profile of a 40-year-old male driver with a clean record and full coverage (100/300/100 with a $1,000 deductible) on a 2012 Toyota Camry LE, assuming 12,000 miles driven annually. Credit tiers reflect Quadrant's credit alignment buckets: excellent, good, fair, below fair and poor. Rates are ZIP-code-level national averages across all available providers. State variation figures come from the same dataset filtered by state.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.
