Car Insurance Soars for Drivers With Poor Credit; Here’s What to Do

[Premium Spikes Hit Drivers With Poor Credit: Actionable Ways to Manage Rising Rates]

Even with a flawless driving record, individuals with poor credit faces significantly higher car insurance rates.

Over the last three years, auto insurance premiums for drivers with poor credit have climbed 37.7% per NerdWallet’s 2026 Auto Insurance Rates Report. This increase has outpaced even those with good credit who experienced a crash or reckless driving.

In January 2023, a driver with poor credit and an unblemished driving record paid a median annual rate of $2,864 for full‑coverage insurance. By January 2026, that cost had risen to $3,944—a $1,081 increase—while a driver with good credit experienced only a $576 rise.

“Credit scores are among the most damaging factors leading to higher auto insurance premiums,” says Michael DeLong, research and advocacy associate with the Consumer Federation of America, a Washington, D.C.-based nonprofit. “The penalties are particularly severe.”

While post‑accident or post‑DUI rate hikes are not unexpected, DeLong notes that many drivers are unaware that their creditworthiness influences car insurance costs. Additionally, rebuilding credit can take several months.

Fortunately, there are steps drivers can take to reduce costs more quickly. DeLong recommends obtaining quotes from multiple insurers, since some companies apply less penalty for poor credit. Raising a deductible, reviewing coverage needs, and minimizing small claims can also provide relief.

Price trends hurt drivers with poor credit

NerdWallet’s analysis found that insurers raised rates more sharply from 2023 to 2026 for drivers with poor credit than for those with good credit — even if the poor‑credit driver had a flawless record while the good‑credit driver had a DUI, speeding ticket or at‑fault crash.

Driving profile

Cost in 2026

Increase from 2023

Poor credit + clean record

$3,944

37.7%

Good credit + DUI

$4,474

35.9%

Good credit + speeding

$3,043

34.6%

Good credit + at‑fault crash

$3,503

32.6%

Good credit + clean record

$2,359

32.3%

Median annual rates for full‑coverage auto insurance

When our sample driver with poor credit also had a recent DUI or speeding ticket, rate increases were even greater. Prices for a full‑coverage policy went up by more than 40% for drivers with poor credit and a recent DUI, the biggest increase of any profile we analyzed.

Driving profile

Cost in 2026

Increase from 2023

Poor credit + DUI

$7,013

40.4%

Poor credit + speeding

$4,815

38.2%

Poor credit + clean record

$3,944

37.7%

Poor credit + at‑fault crash

$5,584

36.7%

Median annual rates for full‑coverage auto insurance

Why credit matters to insurers

Drivers often think it’s unfair for credit to affect car insurance prices, DeLong says, since it isn’t directly linked to driving behavior. Some states agree; California, Hawaii and Massachusetts don’t allow credit as a factor in setting auto insurance rates.

“It helps in predicting expected claims activity and loss costs more accurately,” said Norman Niami, a member of the American Academy of Actuaries’ Automobile Insurance Committee, in an email.

The practice has been controversial, with critics arguing it disproportionately hurts low‑income and minority drivers. But a Federal Trade Commission report to Congress in July 2007 concluded that credit‑based insurance scores were strong predictors of risk even when controlled for income, race and ethnicity.

[2]

A Report to Congress by the Federal Trade Commission. Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance. Accessed Nov 2, 2026. View all sources

Building credit may help, but it’s complicated

Working to build your credit over time may help lower your car insurance premiums, but it’s not a sure thing. A credit‑based insurance score is just one of many factors (along with things like location, age and driving history) that insurers use to rate a person’s risk.

Building credit “can produce a noticeable premium decrease in some cases, while producing little or no change in others,” Niami said, depending on whether the new score causes an insurer to move you into a better rating tier. Each insurer sets its own score thresholds, so a score viewed as “poor” by one insurer might be considered “fair” by another.

At the same time, consumer advocates argue it’s difficult for many people to take the steps needed to strengthen their credit scores.

“Most people probably have some idea that you can improve your credit score by trying to pay your bills regularly and reliably, and using different kinds of financial resources and credit cards,” DeLong says.

“But again, that’s easier said than done,” he says. “If you’re struggling at a low‑wage job and trying to juggle bills, or if you don’t easily have access to a credit card, that advice may not be especially helpful.”

What drivers can do

Drivers with poor credit or no credit may be able to take other steps to lower their premiums.

Comparing car insurance quotes from different companies is one of the best ways to ensure you have the cheapest rate possible. Insurers set their own pricing formulas, and some are more forgiving of poor credit than others. A NerdWallet analysis of October 2026 rates found that in about half (49.3%) of U.S. ZIP codes in states that allow credit scoring, the cheapest insurer for a driver with poor credit was a different company than the cheapest for a driver with good credit.

Although you can’t improve your risk profile overnight, “there’s a bunch of small things you can do that over a two‑ to three‑year span make you look a lot better” to insurers, says Bradley Flowers, founder of Portal Insurance agency in Mobile, Alabama.

Consider a higher deductible. Raising your car insurance deductible — the amount of a future claim that you agree to cover yourself — lowers your premium and signals to insurers that you’re less likely to file a claim. But be sure you can afford to pay the higher deductible if you have to make a claim.

• Adjust how you’re billed by insurers. By signing up for automatic payments and ensuring you don’t miss insurance payments each month, you’ll get a small discount while improving your risk profile for insurers.

• Avoid minor claims if you can. Flowers recommends thinking twice about filing minor claims, such as windshield cracks. “When you’re in one of these situations, let’s save our insurance for the really bad stuff,” he suggests.

Lastly, be sure your coverage fits your vehicle. If you could afford to replace your car on your own, consider dropping collision and comprehensive coverage to bring your premiums down. Your trimmed‑down policy would still provide you with liability coverage after a crash, while leaving you to cover damage to your vehicle.

NerdWallet’s 2026 Auto Insurance Rates Report is based on an analysis of more than 1.4 billion rate estimates provided by Quadrant Information Services for all 50 states and Washington, D.C., from January 2023 to January 2026.

Quadrant derives its rate data from modeled estimates based on carrier rating algorithms; figures do not reflect every available carrier or every consumer’s individual rate. Liberty Mutual does not participate in Quadrant’s rate data and is not represented in this analysis.

Quadrant’s figures are modeled rate estimates produced by running a fixed driver profile through carrier rating algorithms. They represent both new business and renewal rate estimates, and they are not a record of what actual drivers paid.

NerdWallet anchored its analysis to a 3‑year old Toyota Camry LE, ensuring each analysis period reflected rates for the same‑aged car.

The primary rate analysis is based on a 35‑year‑old single driver with good credit, no recent at‑fault accidents or driving violations, and a full‑coverage policy with $1,000 deductibles for collision and comprehensive coverage. Rates are pooled across male and female drivers.

In states where drivers must carry other types of insurance not included in our full coverage profile specifications, we added the minimum amount of coverage required by those states. Some policies include additional coverage at the insurer’s discretion.

In addition to our base profile driver with good credit and a spotless driving history, we analyzed rates for the following driver profiles:

Drivers with an at‑fault crash. We added a single at‑fault crash causing $10,000 in property damage.

• Drivers with a speeding ticket. We added a single speeding ticket for driving 16 mph over the speed limit.

• Drivers with a DUI. We added a single drunken‑driving violation.

• Drivers with poor credit. This is the same as our regular base profile, except the driver has poor credit instead of good credit. We also analyzed rates for drivers with poor credit and each of the three incidents above.

NerdWallet applied a strict comparability filter before calculating year‑over‑year figures. Only coverage variants and carrier/state combinations present in all four years of data were included in median calculations. This ensures reported changes reflect genuine pricing shifts among stable carriers, rather than differences caused by insurers entering markets, exiting, or going insolvent during the analysis period.

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Article sourcesArticle sourcesNerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer‑reviewed studies, government websites, academic research and interviews with industry experts. All content is fact‑checked for accuracy, timeliness and relevance. You can learn more about NerdWallet’s high standards for journalism by reading our editorial guidelines.About the author

Andrew has spent his career advising readers about insurance. He has written extensively about auto, home, life and disability insurance, and he holds his property & casualty license in New York. Before NerdWallet, Andrew covered insurance for LendingTree and Policygenius.

Andrew has been quoted as an insurance authority in such publications as the New York Times and the Wall Street Journal, among others. He has also appeared in interviews for NPR’s Marketplace and various local NBC, ABC, Fox and CBS affiliates. He is based in New York City.

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