Best auto insurance in Arizona with bad credit

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Most people are probably aware of how important it is to have good credit before buying a house or planning to finance a vehicle. The better your credit, the lower the interest rate you may be asked to pay. But what some people may not realize is that a lower credit score could also negatively impact your car insurance premiums.

The National Association of Insurance Commissioners (NAIC) reports that carriers typically use the information on your credit report to decide whether to insure you or how much your rate should be. However, the practice is not allowed in Hawaii, California, Maryland, Michigan and Massachusetts. A lower FICO means that cheap car insurance for bad credit in Arizona could be hard to find, but not impossible. There are a few ways you could lower your premiums and get some financial relief while you work to improve your credit score.

The following table highlights how rates are impacted by credit score both in Arizona and on a national level, on average.

Average cost of full coverage car insurance in Arizona by credit

Provider Poor credit Average credit Good credit Excellent credit
State average $2,804 $1,764 $1,547 $1,423
National average $3,873 $1,865 $1,674 $1,487

Best car insurance for bad credit in Arizona

On average, bad credit car insurance in Arizona averages almost $1,200 more per year than the national, good credit rates. The difference in average car insurance costs between drivers with poor credit and those with good or excellent credit may motivate drivers to work on their credit score. Paying off past-due bills and working towards improving a higher credit score can go a long way. Even a small change could make a big difference.

Insurance carriers have their own credit-based insurance scores that account for your debt, payment history, credit mix and more. The factors are similar to what a credit bureau uses, but insurance companies do not disclose the scores. You could get a good idea of your credit standing by referencing the Big Three’s (Equifax, Experian, and TransUnion) credit rating system. Scores 800 and above are considered excellent. A score of 670 or higher could be considered good. Anything below 670 might be considered average, while scores of 580 and lower are generally considered poor.

Why does my credit affect my car insurance rates in Arizona?

According to Nationwide Insurance, 92% of insurance companies factor credit in order to calculate car insurance premiums. It can be an effective way to predict who is more likely to file a claim. Statistics show that people with lower credit tend to file claims more often. To offset the risk of having to pay more for insuring a driver more likely to cause claims, insurance companies usually charge vehicle owners with lower credit scores higher insurance premiums.

You could help avoid the worry of higher rates by staying on top of your personal finances and working towards a better FICO. However, improvements to your credit history take time — you will need to show a history of on-time payments and sensible spending before the changes in your FICO kick in. If you cannot afford your premiums now and need cheaper coverage, switching providers may offer a viable option to save on premiums.

What other factors impact auto insurance rates in Arizona?

Our Bankrate True Cost report provides an overview of what types of events and factors could affect your car insurance rates. Like having a driving under the influence (DUI) conviction, having poor credit is a cause for higher insurance premiums. Some other factors that can increase your car insurance rates include:

  • The vehicle: A BMW 330i costs $2,225 per year to insure, on average, compared to a Honda Odyssey for $1,454.
  • Driving record: A DUI conviction is generally the most expensive cause for insurance premiums going up. It would average $3,336 compared to the average rate for poor credit policyholders of $3,026.
  • Your area: Because ZIP codes factor into quoted rates, a move from one town to another could lower your premiums considerably.
  • Driver age: Teens are one of the most expensive drivers to insure because of their inexperience behind the wheel. The average couple pays an additional $1,800 per year when they add a teen driver to their current policy.

How to get cheap car insurance in Arizona with poor credit

Unfortunately, insurance is likely going to be higher if you have a less favorable credit history. One of the most effective ways to get cheaper car insurance is by improving your credit. But as mentioned, it takes time to achieve a higher credit score. In the meantime, finding savings wherever you can could make a big difference to your bottom line. Car insurance companies typically have discounts that could help. Here are some of the biggest discount opportunities:

  • Sign up for a driver tracking program: Many major car insurance companies provide sizable discounts when you sign up for tracking that monitors your driving habits. The safer you drive, the more you could save.
  • Bundle home and auto insurance: You may be able to get a discount on both your home and auto coverages when you buy them with the same carrier.
  • Pass an approved defensive driving course: An approved defensive driving course can usually be completed online. Once complete, a discount may be applied up to a certain number of years.
  • Install an anti-theft system: Securing your vehicle, such as with an anti-theft device, typically brings you a good discount on your premiums.

Frequently asked questions

Will I get a credit check when I obtain an insurance quote?

If you are worried about the effect of getting multiple car insurance quotes, rest assured that they do not usually affect your credit score. Insurance companies typically perform a soft pull that does not impact your credit file.

How can I get cheaper car insurance?

Shopping around for car insurance and switching carriers may be the most effective way to lower your insurance premiums if you have poor credit. In addition to switching, you may be able to lower your premiums by asking for discounts for being a good driver, having safety and anti-theft car equipment, low-mileage driving and more.

What if my credit score improves before my policy term is up?

You could ask your insurance company to review your credit report for changes to your score. If your insurer finds it has improved, they will likely adjust your premiums. However, this change may take place during policy renewal.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, varied credit tiers and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

Credit: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base), and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining auto insurance rates: CA, HI, MA

Written by
Cynthia Paez Bowman
Personal Finance Contributor
Cynthia Paez Bowman is a finance, real estate and international business journalist. Besides Bankrate.com, her work has been featured in Business Jet Traveler, MSN, CheatSheet.com, Freshome.com and SimpleDollar.com. She owns and operates a small digital marketing and public relations firm that works with select startups and women-owned businesses to provide growth and visibility. Cynthia splits her time between Los Angeles, CA and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development.
Edited by
Insurance Editor