Best auto insurance in North Carolina with bad credit

1
Walter Bibikow/Getty Images

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

According to the Insurance Information Institute, drivers with low credit scores are more likely to file a claim with their car insurance provider. This means that, unless you live in California, Hawaii or Massachusetts, your credit score is impacting the cost of your premium. However, if you are looking for the best car insurance for bad credit in North Carolina, it is not as simple as finding a low credit insurance company.

Average cost of full coverage car insurance in North Carolina by credit

Provider Poor credit Average credit Good credit Excellent credit
State average $1,758 $1,451 $1,325 $1,352
National average $3,873 $1,865 $1,674 $1,487

Best car insurance in North Carolina with bad credit

Poor credit North Carolina drivers pay an average of $1,758 a year for car insurance, which is only $84 more than the national average for good credit but is $433 more than the state average for good credit.

Insurance companies do not look at your credit score to determine your rate. They look at what is called your credit-based insurance score. Like your credit score, your credit-based insurance score is based on information obtained from your credit reports (issued by the Big Three — Equifax, Experian and TransUnion), which means that information on your payment history, debt and credit usage all go into determining your insurance score.

Depending on how good you are with credit, you can be labeled as either:

  • Poor
  • Average
  • Good
  • Excellent

The difference between your credit score and your insurance score is that your credit score can deny you access to loans and lines of credit. Your insurance score will not deny you access to coverage, but it may make it so you are paying more money for financial protection than your peers.

Why does my credit affect my car insurance rates in North Carolina?

Why drivers with low credit scores are more likely to get into accidents is a mystery. Nonetheless, studies have shown this to be true. The Texas Department of Insurance released a study in 2004 (followed by a supplemental in 2005), that showed a definite correlation, as did the FTC in 2007. For example, in the FTC report, a MetLife study is referenced where it was found that low credit drivers posed a 50% greater risk to the company.

Because most drivers either have a 6 month or 12 month policy, drivers who improve their credit score may have to wait a bit before they see their premium become more affordable. This is why many drivers opt to instead switch providers. When reviewing a new application, every insurance company looks at the most up-to-date information when calculating a premium, which is why drivers often save by changing companies.

What other factors impact auto insurance rates in North Carolina?

The true cost of car insurance is determined by a variety of factors, in addition to your credit-based insurance score. The biggest ones include:

  • State or metro: Your zip code can influence your premium because oftentimes certain zip codes have more claims than others. The claim types do not matter (natural disasters, accidents, theft). All that matters is that insurance companies are spending a lot of money there. Therefore, many people are able to save money by simply moving to a new zip code. For example, drivers living in Tampa who move to Orlando see their premium drop by an average of $450.
  • Car: Any high end car you purchase is going to cost more to insure than a mid-range vehicle. A prime example would be a BMW 330i compared to a Honda Odyssey. The former costs an average of $2,225 a year to insure while the latter only around $1,454.
  • Driving history: DUIs, speeding and at-fault accidents are all considered high risk behavior by insurance companies. If you have any of these on your record, they are greatly influencing what you are paying to be insured no matter what your coverage level is.

How to get cheap car insurance in North Carolina with poor credit

Your long term game plan should be to improve your credit score and keep your driving record clean, but there are some things you can do today to lower your car insurance premium. Consider the following:

  • Shopping around: Every company considers the same information when calculating a premium, but every company weighs each factor differently. So while a low credit score will hurt your premium with most insurance companies, some companies will not penalize you as much as others. It is quite possible to save a lot of money by simply shopping for a different provider. The best company for one driver may not be the best for another.
  • Comparing discounts: Bad credit car insurance in North Carolina can often be remedied with a few discounts. And just as some companies are cheaper than others, some companies offer more savings than others with the same type of discount. When comparing two companies, make sure to also pay attention to the best discounts you can take advantage of today and ones you could use a little further down the line with a bit of work.
  • Increasing your deductible: A high deductible will decrease the amount you pay each month, but it will also decrease the amount you get after an accident. Therefore, you may not want to choose the highest deductible possible. Speak with an agent about your budget and coverage needs to choose the best deductible.

Frequently asked questions

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

Credit checks only hurt your credit score if you are applying for a loan or line of credit. A credit check by an insurance company obviously will not hurt your credit score because you are not looking for money. This is the difference between a soft credit check and a hard credit check. If you are looking to protect your credit score, you want a soft credit check.

Where can I find cheap car insurance for bad credit in North Carolina?

The best way to find car insurance for poor credit in North Carolina is to shop around and compare different insurance companies. Remember, your credit-based insurance score is only one factor among many affecting your car insurance premium (and it may not be affecting it as much as another variable). Go through the strategies discussed above to find cheaper car insurance.

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.