Best auto insurance in Texas with bad credit

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A poor credit history can follow you around in the most unexpected of ways. Your credit score may even factor into how much you pay for your car insurance. According to Experian, one of the three main credit bureaus, “Auto insurance companies can, and often do, consider your credit history or use a credit-based insurance score before offering you coverage.”

Texas, unfortunately, has not followed California, Hawaii or Massachusetts in stopping carriers from looking at your credit report to profile you. If your payment history has been less-than-perfect or you have past bankruptcies or foreclosures, you may need to find the best car insurance for bad credit in Texas or you will pay considerably more than someone with a better FICO score.

Average cost of full coverage car insurance in Texas by credit

Cheap car insurance for bad credit in Texas is hard to find. A policyholder with poor credit will pay nearly double, on average, compared to the average cost of car insurance for someone in the Lone Star State with excellent credit. Past-due bills cost you more than late fees and interest charges. If you are reported to the credit bureaus for late payments, your car insurance premiums could go up. Compare how a change in your credit score can negatively impact your annual car insurance premiums.

Provider Poor credit Average credit Good credit Excellent credit
State average $3,053 $2,106 $1,823 $1,663
National average $3,873 $1,865 $1,674 $1,487

Best car insurance in Texas with bad credit

Compared to the rest of the country, average bad credit car insurance Texas premiums of $3,873 are higher than the national average of $1,674 for someone with good credit. Car insurance for poor credit in Texas is roughly $2,200 more compared to the national average for drivers with good credit.

Every insurance carrier has its own credit tiering system. Good, poor, average and excellent classifications can vary from one insurance company to another. However, most coincide with the ranges provided by the Big Three credit bureaus of Equifax, Experian and TransUnion. They are:

  • Poor: 300 to 579
  • Fair to average: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Excellent: 800 to 850

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

The Texas Department of Insurance (TDI) prohibits an insurance company from refusing to insure you or drop your coverage solely based on your credit score. However, the state does not restrict carriers from charging you more for car insurance. They may choose to charge you more, based on how much risk they believe there is that you would stop paying for car insurance or file costly car insurance claims.

There are exceptions. The TDI says insurance companies cannot use your credit score when pricing your coverage if your credit score was affected because of circumstances beyond your control. Some reasons include if you were the victim of identity theft or you experienced hardship after the death of a close family member. To receive the exception, you would have to write a letter to the carrier.

If you do not qualify for an exception, you can avoid the sticker shock of higher poor credit car insurance in Texas by switching providers. Shopping around and getting quotes could help find a car insurance company that is more low-credit friendly. You can also work on improving your credit score, although it could take several months before you see any improvement.

What other factors impact auto insurance rates in Texas?

Credit score is just one of many things an insurance company looks at. Other factors could affect your premiums more significantly. Bankrate’s True Cost report details how certain factors potentially affect the cost of car insurance. The biggest include:

  • Your location: Neighboring towns or cities can have noticeably different car insurance rates based on local crime and the number of claims filed.
  • Driving history: Having a DUI, an at-fault accident or speeding ticket could seriously affect your insurance premiums.
  • Vehicle type: Some cars are more expensive to insure, such as a BMW 330i or a Toyota Prius.

How to get cheap car insurance in Texas with poor credit

Drivers with poor credit can find some relief by trying a few methods to lower their insurance premiums. They include:

  • Shopping around: Getting quotes from several providers could pinpoint the best car insurance for bad credit in Texas.
  • Using carrier discounts: Most car insurance companies have a list of discounts available based on your vehicle’s safety features, your driving record, vocation and whether you pay in advance or set up automatic payments, among other things.
  • Raise your deductible: A higher deductible means a smaller payout or a bigger out of pocket cost if you file a claim, but you could lower your monthly premiums. A common, higher deductible is $1,000 instead of $250 or $500.

FAQ

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

Getting a car insurance quote in Texas is not related to a credit check. Insurance companies do not perform a hard pull on your credit for a quote, which will not negatively affect your credit score.

Can my Texas car insurance company cancel my coverage if I file bankruptcy?

According to the Texas Department of Insurance, carriers in the state cannot refuse or cancel your coverage based on your credit score.

How much is bad credit car insurance in Texas?

Car insurance for poor credit in Texas is significantly more expensive. Average rates are $3,873 per year, almost two-and-a-half times the national average of $1,674 for car owners with good credit.

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 and business journalist who has been featured in Bankrate, Business Jet Traveler, MSN, CheatSheet.com, Freshome.com and TheSimpleDollar.com. She regularly travels to Africa and the Middle East to consult with women’s NGOs about small business development and works with select startups and women-owned businesses to provide growth and visibility.