Drivers with poor credit pay 69% to 76% more for full-coverage car insurance than drivers with good credit, according to separate 2026 analyses from NerdWallet and Bankrate. At the high end the gap reaches $2,006 a year, and one major carrier charges its poor-credit customers nearly four times what it bills good-credit drivers.
NerdWallet's June 2026 analysis found poor-credit drivers pay 69% more for full coverage, about $1,605 extra per year. Bankrate measured a wider 76% gap, worth $2,006 annually. Both studies show the penalty has barely moved despite consumer pushback, and only California, Hawaii, and Massachusetts ban credit-based pricing outright.
What the New Data Shows
NerdWallet pegs the average full-coverage premium at $3,924 a year for poor-credit drivers versus $2,320 for good-credit drivers, a 69% jump. Bankrate's 2026 dataset runs higher across the board, at $4,644 for poor credit against $2,638 for good credit, a 76% difference worth $2,006 annually. Roughly 95% of auto insurers factor credit into pricing, NerdWallet reports, citing FICO, so the surcharge reaches almost every shopper outside the three states that prohibit it.
NerdWallet found that poor credit can raise rates more than a recent DUI conviction in some markets, even for a driver with a clean record. On its national average that one factor adds about $1,605 a year, which tops many at-fault accident surcharges. Bankrate's higher $2,006 figure would cover close to a full year of gas for the average commuter.
The Carrier Gap Runs From 41% to 289%
GEICO and State Farm sit at opposite ends of the credit penalty. NerdWallet's all-state averages show GEICO charging poor-credit drivers 41% more than good-credit drivers, while State Farm charges 289% more, a $6,133 annual swing. Travelers posts the lowest poor-credit premium among large national insurers at $2,862, so shopping carriers can erase much of the gap before you fix a single point of your score.
| Carrier | Good Credit | Poor Credit | % More for Poor Credit |
|---|---|---|---|
| State Farm | $2,120 | $8,253 | +289% |
| Farmers | $4,067 | $7,596 | +87% |
| USAA* | $1,584 | $2,864 | +81% |
| Travelers | $1,664 | $2,862 | +72% |
| Progressive | $2,006 | $3,161 | +58% |
| Allstate | $3,176 | $4,758 | +50% |
| GEICO | $2,055 | $2,904 | +41% |
Source: NerdWallet, June 2026 analysis of average annual full-coverage rates for a 35-year-old good driver, averaged across all states. USAA is open only to military members, veterans, and their families.
Where You Live Changes the Penalty
State borders swing the penalty from 39% to 148%, a wider spread than the carrier gap. Bankrate found South Dakota drivers pay 148% more for poor credit, the steepest in the country, with New Jersey close behind at 116%. North Carolina lands at 39%, because regulators there limit how far credit can move a premium.
Three states erase the penalty completely. California, Hawaii, and Massachusetts bar insurers from using credit on auto policies, so a 550 score and an 800 score draw the same quote. Michigan limits the practice as well, yet broad exceptions let carriers keep applying it, which leaves Michigan poor-credit drivers paying 113% more on NerdWallet's figures.
| State | Poor-Credit Penalty | How It Compares |
|---|---|---|
| South Dakota | +148% | Highest in the U.S. |
| New Jersey | +116% | Second steepest |
| National average | +76% | Bankrate baseline |
| North Carolina | +39% | Among the lowest |
| California, Hawaii, Massachusetts | 0% | Credit banned |
Source: Bankrate, 2026 full-coverage rate analysis comparing good-credit and poor-credit drivers with the same profile. Each penalty reflects how much more a poor-credit driver pays than a good-credit driver in that state.
What It Means for You
Run the math on your own renewal. If you carry the Bankrate good-credit average of $2,638 and your credit slips into the poor tier, your premium climbs by $2,006 to $4,644, a 76% increase you did nothing on the road to earn. Stretch that over a five-year loan term and the credit penalty alone costs about $10,030.
A poor-credit driver in Florida averages $6,790 a year on NerdWallet's data, well above the $4,037 a good-credit Floridian pays, and a teen driver or a recent claim stacks on from there. That 76% surcharge can decide whether a household keeps full coverage or drops to liability-only. Shoppers in high-rate states feel it first, because their base premiums already rank among the steepest of the 50 states.
Why Insurers Use Credit, and Who Wants It Banned
Insurers argue that a credit-based insurance score predicts claims, not character. That score is not your FICO number, though the two share inputs; in a FICO breakdown NerdWallet cites, payment history accounts for about 40% of an insurance score and outstanding debt about 30%, with the rest from credit age, new credit, and credit mix. Carriers defend the math, citing decades of loss data that link lower scores to higher claim frequency.
The Consumer Federation of America rejects that defense and wants a national ban. Its research and advocacy associate, Michael DeLong, calls credit an unfair proxy that punishes lower-income drivers. Lawmakers are listening, and bills in Iowa, New York, Oklahoma, and Pennsylvania would restrict or end credit-based pricing in 2026.
The Consumer Federation of America estimates that drivers with clean records but poor credit pay $2,343 more a year for basic liability than identical drivers with excellent credit.
What You Should Do Now
Pull Your Insurance Score
Request your credit-based insurance score from LexisNexis through its free annual consumer disclosure, then review your credit reports at AnnualCreditReport.com for errors that drag the number down.
Shop Carriers That Weight Credit Less
Compare quotes from at least three insurers, including Travelers and other carriers that price poor credit gently, since the cheapest poor-credit rate ($2,862) runs far below State Farm's $8,253.
Dispute Errors and Pay Down Balances
About one in five consumers has an error on at least one credit report, per a Federal Trade Commission study, so correcting mistakes and cutting card balances below 30% utilization can lift a score within one or two billing cycles.
Ask for a Re-Rate After Your Score Climbs
Call your insurer once your score reaches a higher tier and request a re-rate, or weigh quotes from carriers built for higher-risk drivers to lock in the lower price.
Frequently Asked Questions
NerdWallet's June 2026 analysis found drivers with poor credit pay 69% more for full coverage, about $1,605 a year, than drivers with good credit. Bankrate measured a 76% gap, or $2,006 a year. The penalty varies by carrier and state, reaching 289% at State Farm and 148% in South Dakota.
A credit-based insurance score predicts how likely you are to file a claim, while a FICO score predicts how likely you are to repay debt. The two use similar inputs, such as payment history and outstanding balances, but vendors like LexisNexis weight them differently. Improving your credit habits usually lifts both.
California, Hawaii, and Massachusetts prohibit insurers from using credit to set auto rates. Michigan limits the practice but allows broad exceptions, so credit still affects Michigan premiums. Bills in Iowa, New York, Oklahoma, and Pennsylvania could add more restrictions in 2026.
Paying down card balances below 30% utilization and disputing report errors can raise your score within one or two billing cycles. Once your score reaches a higher tier, ask your insurer for a re-rate or compare quotes from carriers that weight credit less. Shopping three or more insurers often saves the most.
- NerdWallet - What to Know About a Credit-Based Insurance Score (June 2026)
- Bankrate - Drivers With Poor Credit Pay 76% More for Insurance, but Should They?
- Consumer Federation of America - Report Details Severe Credit Score Penalties in Auto Insurance
- CNBC - Insurance Rates Based on Credit History Draw Scrutiny From Lawmakers
- Federal Trade Commission - Study on Credit Report Accuracy