Best auto insurance in Colorado with bad credit

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If your credit score is low, you are statistically more likely to file an auto insurance claim. With the exception of California, Hawaii and Massachusetts, all states allow insurance companies to use credit scores as a contributing factor when calculating a premium, which means most drivers’ credit scores are impacting their car insurance premiums.

This is not to say there is a need to specifically shop for bad credit car insurance in Colorado. There is, however, still a need to shop around for the best car insurance, but that holds true for everyone.

Average cost of full coverage car insurance in Colorado by credit

Provider Poor credit Average credit Good credit Excellent credit
State average $3,321 $2,213 $2,016 $1,679
National average $3,873 $1,865 $1,674 $1,487

Best car insurance in Colorado with bad credit

Drivers with poor credit in Colorado will pay an average of $1,647 more for car insurance than the national average for good credit drivers ($1,674).

Insurance carriers use a credit tiering system to determine whether a driver is likely to file a claim. The categories are:

  • Poor
  • Average
  • Good
  • Excellent

You may notice these are very similar to the categories you can get on either your FICO or VantageScore credit scores. That is because the data is taken from the same source: your credit reports.

FICO and VantageScore both generate a credit score for each person by analyzing information from each of your credit reports. Because everyone has three credit reports (obtained from the Big Three — Equifax, TransUnion and Experian), each person also has three credit scores.

However, when it comes to your credit-based insurance score, the insurance company could be looking at a report from either LexisNexis Risk Solutions or, once again, FICO.

The difference between a credit score and a credit-based insurance score?

Financial institutions use your credit score to determine your ability to repay a debt. Insurance companies use your credit-based insurance score to determine the likelihood you will file a claim. The data they use is the same, but the outcomes are different. A financial institution looks at the data and uses it to deny or approve your loan or credit request, while an insurance company uses it as only one factor among many to determine the cost of your premium.

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

Multiple studies have found a strong relationship between credit scores and insurance claims/ losses.

The ‘why’ is unclear, yet the relationship between the two has been shown in many studies. For example, an FTC report from 2007 references a study conducted by MetLife where it was found that drivers with poor credit posed a 50% greater risk for filing large auto claims and a 90% greater risk for large homeowners insurance claims. From a business standpoint, that is a lot of money

If you have a poor credit score, there are a lot of reasons you should work to improve it, but it should be clear that lowering your insurance premium is one of them.

Once you are in a new credit category, it is possible you will have difficulty with your insurance company lowering your premium in a timely manner. Most car insurance policies are written for six months, so you may have to wait until your policy renews to see any significant change. It is for this reason that many drivers simply switch providers. When you switch providers, insurance companies look at your most recent data when calculating the cost of your premium.

What other factors impact auto insurance rates in Colorado?

The true cost of car insurance is impacted by many factors in addition to your credit-based insurance score. The biggest ones include your:

  • Location: Your zip code has a big impact on your car insurance— whether it is because of theft, vandalism or accidents. If you live in a zip code with a high amount of claims, you will be more likely to file a claim yourself. Therefore, moving could greatly offset your insurance costs.
  • Driving history: Recent traffic violations, such as at-fault accidents, speeding tickets, and DUIs can stay on your record for years. If you have a serious traffic violation on your record in Colorado (such as a DUI), do not be surprised if your premium is increased by over $700.
  • Vehicle type: An expensive car costs more to insure because it costs more to repair and replace. If you are struggling to keep up with insurance costs, it may be a wise move to drive something mid-range but that also has a high safety rating. Example: a Honda Odyssey roughly costs $1,454 a year to insure, compared to the $2,225 for a BMW 330i.

How to get cheap car insurance in Colorado with poor credit

In the long run, you will want to improve your credit score to lower your insurance costs. The primary ways to do this are by paying down your debt and making on-time payments. Apart from that, you will get cheaper car insurance by:

  • Increasing your deductible: An increased deductible will lower your monthly premium. Every insurance company offers various deductible levels, so choose the one that best fits your budget and coverage needs.
  • Driving an older car: New cars cost more to repair and replace, which is why they cost more to insure. Drive an older car with a high safety rating to lower your premium. If possible, purchase an older car that you can also pair up with discounts, such as the daytime lights discount or dual airbags discount.
  • Bundling: If you also need condo, apartment or homeowners insurance, it almost always pays to stay with the same company because you will get a discount on both policies. If you need to insure two more cars, the same also holds true. It is considered a customer loyalty discount, and it is always worth pursuing to lower your premium and annual insurance costs.
  • Shopping around: Every company has its own pricing algorithm, which means you will get a different premium with every company. Some companies do not weigh the importance of credit scores as strongly as others, so if you have a low credit score it is even more important to shop around.
  • Comparing discounts: Companies often offer similar discounts, but the amount you save with each is usually different. To get the lowest premium low credit drivers often have to find the company offering the best discounts.

FAQ

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

Yes, but Insurance companies use what is called a soft credit check as opposed to a hard credit check. A soft credit check still looks at the information in your credit report, but because you are not borrowing money your credit score is not hurt.

Who offers the best car insurance for bad credit in Colorado?

Cheap car insurance for bad credit in Colorado will be different for each driver because your credit score is only one factor among many that insurance companies use to determine a premium.

Which company insures drivers with bad credit in Colorado?

Bad credit car insurance in Colorado does not exist. The reason is because a credit score by itself will not affect whether or not you can get insured. It will, however, affect the cost you pay for a premium. To get the best premium you will need to shop around and will want to take steps to improve your score.

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
Lauren Ward
Insurance Contributor
Lauren Ward has nearly 10 years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, and Reviews.com. She covers auto, homeowners, and life insurance, as well other topics in the personal finance industry.