Saving Money on Auto Insurance When You Have Poor Credit

Smiling couple buying a new car from a salesman

When getting an auto insurance policy in the Chicago metropolitan area, you might pay 87% higher than the average rate in the state of Illinois if you have poor credit. Even if you have no history of dangerous driving behavior, your premium can still be higher than that of someone with excellent credit but has been convicted of driving under the influence of alcohol.

Saving on car insurance in Addison, Bloomingdale, Carol Stream, or Downers Grove is one more reason to build your credit. For the time being, do the following to get a favorable quote while your FICO scores are far from ideal:

Consider All Insurers

Talk to as many auto insurance carriers as possible. Unlike when you are shopping around for loans, comparing insurance rates does not hurt your credit one bit. Limit yourself to name-brand policies only puts you at a disadvantage since virtually unknown companies can sometimes make better offers for comparative types of coverage.

Thanks to the financial technology revolution, tech-driven insurers have been able to lower their costs and pass on their savings to customers. Many of them utilize telematics devices to track a person’s driving performance, which can serve as the basis for reasonable discounts.

Be Selective About Coverage

Unnecessary coverage is the usual suspect for car insurance overpayment. Since your poor credit is already a liability, you can’t afford to pay for anything more than you need.

Certain auto insurance policy features are necessary, but the coverage needs of your vehicle go down as it ages. Think about your car’s value to narrow down the most sensible options.

Raise Your Deductible

The greater your deductible, the less risk your car insurer has to absorb when taking you as a customer. It is the portion of the bill you will foot before your insurance coverage kicks in. Although a higher deductible endangers your savings in case of a road accident, it is an effective way to save money on insurance if you consider yourself a responsible driver.

Do Not File a Claim Too Quickly

insurance agent handing folder with claims written on itThe reality of the situation is that insurance premiums are priced based more on your likelihood of filing a claim than your driving performance. In other words, you should be extra smart about your requests.

Find out the statistics about the auto insurance rate hikes in your area before filing a claim. This way, you can analyze whether the damages to your car are higher than the premium increase you might get.

Typically, a car insurer increases a person’s rate for at least three years after a claim. In other words, a small claim can save you money in the short term, but it can hurt your finances in the long run.

Credit-based insurance rates upset many individuals, but they have a silver lining; they can keep your premium low as long as you have stellar credit. Your auto insurance premium should decrease on its own as your credit improves, so keep an eye on the reductions as you handle your finances more responsibly.