When you’re attempting to buy car insurance, a lot of insurance firms are interested in your credit score. However, if you’re young, new to the country, or haven’t taken any loans or credit cards, you may not have a credit history.

This doesn’t necessarily imply that you can’t obtain car insurance.


In this article, Our team will explain how credit scores influence car insurance rates and provide suggestions on how to obtain car insurance if you don’t have any credit history.

We’ll also provide a list of the best car insurance providers available.

What Is Credit History?

Your credit history is a record that reflects how you manage debt. If you have never used credit to make purchases, you may not have a credit history.

This might be the case if you prefer to pay for major purchases in cash, did not take out a car loan, or do not own a credit card.


If you do not have credit reports with the three major credit bureaus, namely Experian, TransUnion and Equifax, then you are considered credit invisible.

These bureaus collect information about your credit ratings, which is then made available to financial institutions. It is possible to have a credit report with no credit score.

A credit score is a numerical rating that represents your perceived ability to honor your financial obligations. It analyzes your credit history and current financial responsibilities.

Having a credit report with no score can occur when you have not borrowed money or made debt payments in the last six months.

What Is a Credit Score?

Your credit score is determined based on the information in your credit report and is a measure of how likely you are to make payments on time. Most providers use the FICO credit-scoring model, which ranges from 300 to 850.

A score between 300 and 579 is considered poor. Insurance companies classify individuals with low credit scores as high-risk drivers because they are more likely to file claims.

How Do Car Insurance Companies Use Credit Scores?

Auto insurance companies may use your credit score to determine coverage and rates based on risk. To help assess this risk, they use your credit report to learn:

  • How much debt you have
  • What types of loans you’ve taken out
  • Your history of repaying debt
  • How long you’ve had a loan or line of credit

If you don’t have any credit history, insurance providers won’t have any information to evaluate your creditworthiness. Although they are unlikely to refuse to insure you, your insurance costs are likely to be higher.

Once you are insured, your payments are not reported to the credit bureaus. Therefore, they do not have an impact on your credit score.

However, if you stop making payments and your debt is sent to a collection agency, your credit score may be negatively affected.

Your insurance policy may be cancelled for unpaid premiums, resulting in a lapse in coverage. While this won’t impact your credit score, it may lead to higher premiums in the future.

Do Past Claims Hurt Your Credit Score?

An insurance claim is a request made to your insurance provider to cover something under your policy. Filing a claim will not impact your credit score. Examples of auto claims include:

  • Car accident
  • Damage caused by another car
  • Damage caused by a natural disaster
  • Theft
  • Property damage caused by your car
  • Injury caused by your car
  • Death caused by your car

It’s important to understand that your claims history doesn’t have any direct impact on your credit score. However, filing multiple claims in a short period of time can lead to an increase in your car insurance premium.


Most car insurance companies check on auto claims from the past three to five years. If you have a history of filing too many claims, it could make insurers believe that you’re likely to file more claims in the future, resulting in higher premiums.

Can Insurers Check Drivers’ Credit in Your State?

Most states allow insurance companies to consider your credit score and history when determining your premium for auto insurance. However, some states have laws in place to protect consumers from this practice.

If you live in any of the following states, you can rest assured that auto insurers are prohibited from using your credit score to set your auto insurance rates:

  • California
  • Hawaii
  • Massachusetts
  • Michigan

In Maryland, auto insurers are allowed to use your credit history to set rates on new policies. However, they are not permitted to use your credit score to deny or cancel coverage, deny policy renewal, or increase your premium when you renew.

Insurance Option for Drivers With No Credit

It is possible to obtain car insurance even if you have no credit, but it is likely that you will have to pay a higher premium. However, there are ways to get affordable insurance coverage even without excellent credit.

If you have a good driving history and are a safe driver, you can enroll in a telematics insurance program that can reduce your premium.

Telematics programs use mobile apps or plug-in devices that collect data about your driving habits and mileage. These programs reward safe drivers with lower premiums, while increasing rates for bad drivers.

Most providers analyze the following driving behaviors: phone use while driving, time of day you drive, mileage, acceleration, and hard braking. After a set period of time, the provider determines your new rate based on your driving habits.

However, telematics insurance is not suitable for everyone. If you are an unsafe driver or drive a lot during rush hour or late at night, you may not want to enroll.

How To Build Credit

Building credit from scratch is a time-consuming process, and it may take at least six months to establish a credit score once you open an account. There are a few ways to build your credit, such as opening a credit card, making on-time payments, and becoming an authorized user on someone else’s credit card.

If you decide to open a credit card, it is crucial to make payments on time and maintain a low balance. Your payment history plays a significant role in determining your credit score, and it can be the difference between good credit and bad credit.

If you choose to become an authorized user on another person’s credit card, make sure you select the right person. Their payment history on the card will reflect on your credit score. While this method has its benefits, it can also have a negative impact if you or the primary user makes late payments.

The Bottom Line:

If you don’t have a credit history, don’t worry, you can still get car insurance. There are insurance companies that specialize in providing coverage to drivers without credit history.

You may have to pay higher premiums than someone with an established credit history, but you’ll still be able to get coverage. 

Once you have car insurance, it’s important to work on building your credit. A good credit score is one of the factors that insurance companies consider when calculating your premiums.

By building your credit, you can improve your chances of getting the best car insurance rates when it’s time to renew your policy.

Paying your bills on time, keeping your credit utilization low, and limiting your credit inquiries are some of the ways you can improve your credit score over time.