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No Credit Check Auto Insurance

20 Mar

If your auto insurance is due to be renewed or if you are in the market for car insurance, you may be in for an unpleasant surprise.

Risk has always been based on the driving record of the insured, however, most insurance companies now check your credit score as well. Regardless of the length of time you’ve been insured by your company, if you have bad credit they may cancel your policy (even if you’ve been claim free). If the insurance company does not cancel the policy, they may raise your premiums or sell your policy to a subsidiary.

There are options for people with bad credit. You need to look for a company that offers no credit check auto insurance.

Why Did Auto Insurance Companies Begin Checking Credit?

As with many employers, insurance companies claim there is a direct correlation between risk and financial stability. A study performed by the insurance industry demonstrated that the lower a credit score an insured has, the more likely the insured is to file claims, exaggerate claims and commit arson or other insurance fraud.

While you may never be associated with such behaviors, you will face discrimination due to your credit score when it comes to purchasing auto insurance.

Credit Scores

Credit scores are compiled by credit bureaus. A number of things go into making up your total credit scores. Among these are:

Bankruptcy, liens, collections, foreclosures
Payment history
How long the applicant has had credit
Own or rent
How many times the applicant has applied for credit or utility accounts.
The number of active credit cards (including store cards)
The types of credit the applicant is using
How much credit the applicant has available versus the amount of debt.

Low scores are those that fall below 600. A good score is anything above 700.

If you don’t know your credit score, you are entitled to a free copy of your credit report once a year under the U.S. Fair Credit Reporting Act. This is not the “free” credit report advertised on television, radio and the Internet. Your free report is obtained from a credit bureau. The three largest credit-reporting agencies are Equifax, Experian and Trans Union.

Once you have obtained a copy of your credit report, you should review everything to check for mistakes or identity theft. Visit the Federal Trade Commission website to learn how to dispute errors.

If your credit improves, you may no longer need to purchase auto insurance from a company that does not perform credit checks.

No Credit Check Auto Insurance

You can avoid some of the hassles associated with traditional car insurance by looking for auto insurance that can be purchased without a credit check.

Allstate Insurance Company does not perform credit checks on clients when determining cost.

Progressive Insurance does not check credit for insured individuals who pay six months or a year in advance. If you choose to make monthly payments, however, Progressive with perform a credit check.

Some companies will sell you auto insurance even if you have bad credit, however, it will most likely be at a higher rate.

Online Quotes and Comparison

There are numerous sites online that will retrieve quotes for no credit check auto insurance or for bad credit car insurance. You are under no obligation to purchase the insurance however you should exercise caution.

Some companies advertise bad credit insurance or no credit check insurance in Google Adwords and other places, but when reading the fine print you’ll see you’re giving permission for the company or companies to run a credit check.

Insurance rates vary due to a number of factors including:

City
State
Make/Model/Year of vehicle(s)
Driver Age(s)
Marital Status
Own/Rent Residence
Miles Regularly Driven
Primary Purpose of Vehicle (commute to work, work vehicle, leisure vehicle, etc.)
Driving Record(s)
Type and Amount of Coverage

It’s always a good idea to obtain rates from several companies for comparison.

You should also check with your state’s department of insurance to see how many complaints have been filed against the companies you consider. A little caution and research can save you from major problems later. You may also be interested in auto financing with bad credit or auto loans with bad credit.