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Depending on where you live, you could pay triple what drivers with great credit pay

If you have bad credit, keep yourself and your car out of Arizona.

A study released today by a website called InsuranceQuotes says your credit score and credit history are a huge deal when it comes to what you pay for car insurance. Arizona, New Jersey, and Nevada see the highest increases — more than 200 percent — when credit scores plummet.

Laura Adams, senior insurance analyst at InsuranceQuotes, says almost half of Americans don’t even know that credit has a huge impact on auto insurance premiums.

“What’s really concerning is that 42 percent of Americans aren’t aware that there’s a relationship between credit and insurance rates,” Adams says. “Over 95 percent of U.S. insurance companies use credit to set auto premiums in every state except California, Hawaii and Massachusetts, where the practice is not allowed.”

Here are the next four states with the biggest increases, led by Arizona but with the others very close behind…

  1. Arizona: 226 percent
  2. New Jersey: 216 percent
  3. Nevada: 213 percent
  4. Nebraska: 206 percent
  5. Oklahoma: 201 percent

Some states don’t have it as bad, even though scores still have a huge impact on costs. Aside from the three states that don’t allow credit scores to impact rates, here are the least punishing…

  1. North Carolina: 51 percent
  2. Virginia: 75 percent
  3. Wyoming: 76 percent
  4. New York: 77 percent
  5. Connecticut: 86 percent

“Insurance companies set premiums based on the information in your credit history and typically use it only for an initial quote,” Adams says. “So consumers who have improved their credit over time should request a new auto insurance rate in order to save money.”

And if you don’t request a new rate, it could cost you. The study showed that if you have poor credit, your premium could go up as much as 104 percent.

Lower your auto insurance by getting out of debt

If you’re having trouble affording your car insurance premiums, take a look at your credit score and credit history. You may be able to receive better rates.

Americans have a ton of debt, and much of it comes from credit cards and student loan debt. See what’s bogging you down from getting out of debt and start to make bigger payments every month to them. If you’re only paying the minimum on your credit card, your monthly fees alone will keep you from ever making a dent in your debt.

Once you start making regular payments on your credit card, and you’re charging a lot less than you can afford, credit bureaus will start to take notice of your good behavior. After you’ve figured out what you owe and you’re making payments, take a look to see how you got here. Was it a medical emergency? Overspending when you couldn’t afford it? Not paying your balance in full each month? Whatever it was, find it out and make changes so it doesn’t happen again!

If you need some extra help, check out our Solutions Center for advice from experts on how to get out of debt.

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Meet the Author

Dori Zinn

Dori Zinn


Zinn is a freelance journalist based in Fort Lauderdale, Florida.

Budgeting & Saving, Credit & Debt

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