Understanding the Connection Between Credit and Car Insurance

When it comes to securing affordable car insurance, your credit score plays a bigger role than you might think. Many drivers are surprised to learn that insurers often use credit-based insurance scores to determine premiums. If you have bad credit, you may face higher rates or even struggle to get approved at all.

Why Do Insurers Care About Credit?

Insurance companies argue that there’s a correlation between credit history and the likelihood of filing a claim. Studies have shown that individuals with lower credit scores tend to file more claims, which increases risk for insurers. While this practice is controversial—some states have even banned it—many providers still rely on credit data to set rates.

Freeway Insurance: A Solution for Drivers with Bad Credit?

Freeway Insurance is one of the few providers that markets itself as a solution for high-risk drivers, including those with poor credit. But does it really live up to its promises?

How Freeway Insurance Works

Freeway Insurance operates as an independent agency, meaning it doesn’t underwrite policies itself. Instead, it works with multiple insurers to find coverage options tailored to drivers with less-than-perfect credit. This approach can be beneficial because it allows Freeway to shop around for the best possible rates, even for high-risk applicants.

Pros of Choosing Freeway Insurance

1. No Credit Check Options – Some of Freeway’s partner insurers may offer policies without a hard credit inquiry, which can be a relief for those rebuilding their credit.
2. Flexible Payment Plans – Freeway often works with insurers that provide monthly payment options, making coverage more manageable for budget-conscious drivers.
3. High-Risk Specialists – Unlike traditional insurers, Freeway specializes in finding coverage for drivers with past accidents, DUIs, or poor credit.

Cons to Consider

1. Potentially Higher Premiums – Even with Freeway’s help, bad credit can still lead to higher-than-average rates.
2. Limited Availability – Freeway operates in select states, so not all drivers will have access to its services.
3. Varying Customer Experiences – Some customers report excellent service, while others mention difficulties with claims processing.

How to Improve Your Chances of Approval

If you’re worried about your credit affecting your insurance rates, there are steps you can take to improve your situation.

1. Check Your Credit Report for Errors

Mistakes on your credit report can drag down your score unnecessarily. Obtain a free copy of your report from AnnualCreditReport.com and dispute any inaccuracies.

2. Work on Building Better Credit

Even small improvements can make a difference. Paying bills on time, reducing credit card balances, and avoiding new credit applications can gradually boost your score.

3. Compare Multiple Quotes

Don’t settle for the first offer you receive. Freeway Insurance can help, but it’s also worth checking with other high-risk insurers like The General or Dairyland.

4. Consider Usage-Based Insurance

Some providers offer pay-as-you-drive programs that base premiums on driving behavior rather than credit history. If you’re a safe driver, this could be a cost-effective alternative.

The Future of Credit-Based Insurance Pricing

With growing concerns about financial equity, some states are pushing back against credit-based insurance scoring. California, Hawaii, and Massachusetts have already restricted or banned the practice. If this trend continues, more insurers may need to adjust their underwriting criteria.

For now, though, drivers with bad credit must navigate the system carefully. Freeway Insurance offers a potential lifeline, but shopping around and improving your financial health remain the best strategies for securing affordable coverage.