Bad credit? It'll cost you. Drivers with bad credit pay significantly higher auto insurance rates than those with good credit.

In fact, auto insurance rates for drivers with bad credit are 53 percent higher than for drivers with good credit.

Why Do Credit Scores Affect Auto Insurance Rates?

It may seem unethical for insurers to check credit scores when calculating auto insurance rates, but they do so for a good reason: to assess a driver's risk level. As it turns out, a driver's credit score is a very accurate indicator of his or her potential risk to insurers.

Studies have shown that drivers with good credit are involved in fewer accidents and commit insurance fraud less often than drivers with bad credit. Drivers with good credit also file fewer claims than drivers with poor credit. Considering these statistics, it's not surprising that drivers with good credit are offered the cheapest auto insurance rates.

Do All Insurers Check Credit Scores?

Not all states allow insurers to check credit scores. The laws and regulations that govern insurance are set at the state level, so where you live determines what information companies can gather and how they can use it, as well as what your rights are.

Bad Credit? Search for a Cheaper Auto Insurance Rate

For drivers with bad credit, there's good news. Not every insurer uses credit scores to calculate auto insurance rates. So if you have poor credit, shop around and find an insurer who won't punish you for your credit history.

Likewise, there's good news for drivers with good credit. If your current insurer doesn't reward drivers with good credit, shop around and find one that does. It could save you hundreds each year.

Whatever your credit history, shopping and comparing auto insurance rates with LowPolicy.com could save you money. Visit our free quote form and get started right away.