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The cost of auto insurance is partly tied to the credit score system. Simply put, buying car insurance with excellent credit is less expensive. Here, we’ll outline why that’s the case, how much you can save by having an excellent score, and steps you can take to add even more luster to your score.
Below are our top picks for car insurance for drivers with good credit. We've listed each insurer alongside their national average premium for drivers with good credit, to give an idea of which insurers are generally more (or less) expensive:
Keep reading to learn about these insurers' coverage, discounts, customer service, and more.
Progressive is another insurance company offering an alternative way to save and receive a competitive car insurance rate. It's called Snapshot, and like some of the other apps used by insurance companies, it provides personalized rates based on driver habits. Drivers can even sign up for a deductible bank that reduces their collision and comprehensive deductibles by $50 for every six months they drive without a claim.
USAA is the insurer to beat when it comes to making customers happy, as evidenced by their consistently high ratings in the annual J.D. Power Auto Insurance Satisfaction Study. As one of the best car insurance companies for military members and their families, USAA offers competitive prices, flexibility, and is easy to use from anywhere in the world.
Simply put, it's tough to find lower auto insurance rates than Geico. The only fly in the ointment is that Geico's coverage options are pretty standard in the industry. Policies are easy to purchase, and representatives are easy to contact via mobile, internet, and phone. For inexpensive insurance and top-notch customer service, Geico is a top competitor.
Financial stability and outstanding customer service is the name of the game for State Farm. The auto insurance company has both an AA++ rating (the highest possible) from A.M. Best for financial strength and one of the highest customer satisfaction ratings from J.D. Power. State Farm is an appealing option for at least two more reasons: Live agents available nationwide and a growing digital presence.
Standard Rate | Rate With Excellent Credit Score |
---|---|
$180/month | $78/month |
Standard Rate | Rate With Excellent Credit Score |
---|---|
$135/month | $91/month |
Standard Rate | Rate With Excellent Credit Score |
---|---|
$145/month | $96/month |
In addition to offering a competitive monthly rate, Nationwide provides drivers with another way to save: Smartride. Using an app to record driving habits, the company lowers the rates of safe drivers. For those who would prefer to go a more traditional route, Nationwide offers policies with perks like accident forgiveness, a vanishing deductible, and gap coverage. As a bonus, Nationwide scores well in J.D. Power's satisfaction studies. Although there are companies with lower rates, drivers looking for excellent credit auto insurance would do well to consider Nationwide for an insurance policy.
Standard Rate | Rate With Excellent Credit Score |
---|---|
$185/month | $138/month |
Standard Rate | Rate With Excellent Credit Score |
---|---|
$194/month | $129/month |
Farmers offers some unique car insurance coverage options, like spare parts coverage and guaranteed value coverage that pays a predetermined value for a covered car in the event it's declared a total loss. Both features are desirable for classic car owners. In addition, Farmers has more than 48,000 exclusive and independent insurance agents, meaning it's easy to stick with Farmers through frequent moves.
Standard Rate | Rate With Excellent Credit Score |
---|---|
$211/month | $157/month |
There's often more a driver can do to reduce their insurance rates, even after their credit history has landed them a discounted insurance quote. Here are a few ways:
Even after finding an insurance rate that seems ideal, a driver should take time to compare car insurance rates with other car insurance companies. Here's why: The first quoted rate may not be the best in the market. It takes time to compare rates, but the savings may be worth the time.
Most auto insurance companies offer a full menu of discount options. Here are some of the most common:
There are so many car insurance discounts available, nearly any driver should be able to find one (or more).
Let's say a driver's credit score is good but not quite excellent. Working to improve that credit score may push insurance rates down even more. In addition to helping to receive inexpensive car insurance, an excellent credit score increases a person's odds of scoring a low interest rate on a loan, qualifying for a house they want to rent, or landing their dream job.
The price differential can be dramatic, depending on credit score. For example, a driver with bad credit will pay an average of 52% more for their auto insurance in Pennsylvania and Utah. They’ll pay an average of 58% more in New Jersey and Minnesota. In Kentucky, rates are hiked by an average of 57%, and in New York, it’s a whopping 62%.
Study after study has shown that drivers with high credit scores tend to make fewer auto insurance claims. The inverse is also true. Drivers with low credit scores tend to make more insurance claims. When it comes to insurance companies, it's all about risks. The lower the risk, the lower the auto insurance premium.
Poor Credit | Excellent Credit | |
---|---|---|
National Average | $3,622 | $1,703 |
State |
Average Car Insurance With Poor Credit |
Average Car Insurance With Excellent Credit |
---|---|---|
Alabama | $3,290 | $1,674 |
Alaska | $2,243 | $1,273 |
Arizona | $3,779 | $1,557 |
Arkansas | $3,676 | $1,666 |
California | N/A | N/A |
Colorado | $3,487 | $1,718 |
Connecticut | $4,870 | $2,001 |
Delaware | $4,253 | $2,097 |
Florida | $5,404 | $2,591 |
Georgia | $3,375 | $2,098 |
Hawaii | N/A | N/A |
Idaho | $2,503 | $1,298 |
Illinois | $2,954 | $1,411 |
Indiana | $2,324 | $1,232 |
Iowa | $2,287 | $1,169 |
Kansas | $3,169 | $1,686 |
Kentucky | $4,782 | $2,044 |
Louisiana | $5,867 | $2,757 |
Maine | $3,374 | $1,306 |
Maryland | $3,702 | $2,058 |
Massachusetts | N/A | N/A |
Michigan | N/A | N/A |
Minnesota | $3,728 | $1,576 |
Mississippi | $3,205 | $1,616 |
Missouri | $3,696 | $1,595 |
Montana | $3,348 | $1,818 |
Nebraska | $3,300 | $1,684 |
Nevada | $3,588 | $2,151 |
New Hampshire | $3,516 | $1,255 |
New Jersey | $5,236 | $2,203 |
New Mexico | $2,586 | $1,449 |
New York | $5,685 | $2,132 |
North Carolina | $1,904 | $1,286 |
North Dakota | $3,621 | $1,620 |
Ohio | $2,104 | $1,031 |
Oklahoma | $3,497 | $2,028 |
Oregon | $2,762 | $1,524 |
Pennsylvania | $3,362 | $1,619 |
Rhode Island | $4,214 | $1,911 |
South Carolina | $3,589 | $1,835 |
South Dakota | $3,535 | $1,585 |
Tennessee | $3,156 | $1,388 |
Texas | $3,570 | $2,000 |
Utah | $3,233 | $1,563 |
Vermont | $2,677 | $1,216 |
Virginia | $3,028 | $1,412 |
Washington | N/A | N/A |
Washington D.C. | $4,009 | $2,071 |
West Virginia | $3,388 | $1,570 |
Wisconsin | $2,805 | $1,242 |
Wyoming | $3,258 | $1,552 |
Boosting a credit score comes down to regular, systematic practices, including:
Check credit report to look for inaccuracies: Any mistakes should be reported to the credit reporting agency. They have 30 to 45 days to investigate and remove any information that cannot be verified.
Always pay bills on time. Credit scores are broken down into five sections. Payment history makes up for the most significant piece of the pie at 35%. It’s important to pay utilities, house payments, credit card bills, and any other expenses on time, every time.
Control credit utilization. Credit utilization refers to the amount of money owed in relation to how much available credit a person has. Ideally, a person should keep their credit utilization under 30%, although the lower, the better. Say a person has $10,000 in available credit. Ideally, they wouldn’t use more than $3,000 of it at any given time.
Reduce debt. If a person carries so much debt that they worry about paying bills each month, don't have money left over after bills have been paid, or their credit utilization rate is too high, it's time to get control of those debts by paying them down.
We've only touched on the basics here. For more information, read: The Complete Guide to Your FICO® Score.
While it may be frustrating to pay more for auto insurance due to credit score, the good news is that it's not a permanent state. Any driver can work to improve their credit score. And for the driver with an excellent score, cheap auto insurance is one more reason to keep up the good work.
Offer | Best For | Next Steps |
---|---|---|
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Progressive
|
Great For: Best for alternative ways to save | |
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USAA
|
Great For: Best for military families | |
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Geico
|
Great For: Best for low premiums | |
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State Farm
|
Great For: Best for insurer stability | |
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Nationwide
|
Great For: Best for driving habit tracking | |
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Farmers
|
Great For: Best for unique coverage options |
No. Insurance companies use a soft credit check to determine rates. A soft credit check does not impact a person's credit score.
While other things – like driving and claims records – are important to a car insurance company, it takes credit into account because the research shows that drivers with a low score tend to make more claims.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.