Car Insurance with Bad Credit in the UK: How It Works & How to Get Approved
Having a poor credit score can make life more difficult — and when it comes to car insurance, it’s no different. Many UK insurers run credit checks when you apply for monthly payments, and a low score can lead to higher premiums or outright rejection. But that doesn’t mean you can’t get covered.
This comprehensive guide explains how car insurance with bad credit works, which insurers accept poor-credit applicants, and what you can do to secure affordable, reliable coverage today.
Does Bad Credit Affect Car Insurance in the UK?
Yes, but not in the way most people think. Your credit score doesn’t directly affect your ability to buy car insurance, but it does influence whether you can pay monthly rather than annually. Insurers view poor credit as a sign of potential missed payments, so they may:
- Charge higher monthly interest (up to 20% APR)
- Ask for a larger deposit upfront
- Reject finance-based payment options
- Request annual payment in full
However, drivers with bad credit can still get insured — they just need to know where to look and how to approach the application process strategically.
How Insurers Check Your Credit
When you request a quote or agree to pay monthly, most insurers use a “soft credit check” to estimate your financial reliability. This doesn’t affect your credit score. But if you choose to pay by instalments, a **hard check** may occur, similar to applying for a loan.
Some specialist providers skip credit checks entirely, focusing instead on driving history and claims records.
Types of Checks Used by UK Insurers
- Soft Search: Reviews basic financial history, no impact on credit score.
- Hard Search: Required for monthly payments via credit agreements.
- Affordability Check: Confirms ability to maintain consistent payments.
If your credit history shows missed payments, you may need to opt for a full annual premium to secure coverage.
How to Get Car Insurance with Bad Credit
Even with bad credit, there are several ways to increase your chances of approval and lower your overall costs:
1. Choose Specialist Bad Credit Insurers
Some insurers specialise in helping drivers with poor credit or previous payment issues. These companies assess your application manually rather than relying on algorithms. They often offer more flexible terms and no hard credit check.
Examples include providers that focus on high-risk car insurance or specialist brokers who negotiate with multiple underwriters on your behalf.
2. Pay Annually to Avoid Credit Checks
If you can afford to pay in one go, you’ll avoid the credit check process entirely. Paying annually also saves money since you won’t pay interest on instalments.
Some drivers use a 0% interest credit card to pay their premium upfront and repay it monthly, which avoids the insurer’s finance checks.
3. Improve Your Credit Before Renewal
Small improvements can make a big difference. Before your next renewal:
- Register on the electoral roll
- Pay bills on time for at least 3–6 months
- Reduce outstanding credit card balances
- Check for errors on your credit report
These steps can raise your credit score enough to unlock cheaper monthly payment options.
4. Increase Your Voluntary Excess
Raising your excess (the amount you pay if you claim) shows insurers you’re financially responsible. A voluntary excess of £250–£500 can lower your monthly premium by up to 15%.
5. Use a Guarantor or Named Driver
If your credit is very poor, adding a trusted family member with good credit as a named driver or guarantor may reduce your risk profile and help secure approval.
Why Bad Credit Drivers Pay More
Insurers consider financial reliability part of risk assessment. A history of missed payments can suggest instability, which statistically correlates with higher claim rates. As a result, insurers may increase premiums to offset perceived risk.
Fortunately, consistent payments and a clean driving record can quickly rebuild trust and lead to lower renewals.
Tips to Lower Your Bad Credit Car Insurance Premium
- Compare multiple quotes — each insurer rates bad credit differently.
- Choose smaller or lower-group cars — cheaper to insure overall.
- Avoid missed payments — even one can trigger higher future quotes.
- Install a telematics device — prove reliability through safe driving.
- Bundle policies — combining car and home insurance can create multi-policy discounts.
Will My Credit Score Improve If I Pay My Insurance On Time?
Yes, over time. Paying monthly on time improves your credit history, which may reduce your premiums at renewal. After 12 months of consistent payments, some insurers automatically review your profile and adjust your rates downward.
What Happens If I Miss a Payment?
Missing a payment can lead to policy cancellation and damage your credit further. Contact your insurer immediately if you’re struggling; they may offer a grace period or payment plan. Never let your policy lapse, as gaps in cover can classify you as a high-risk driver.
Final Thoughts
Bad credit doesn’t mean you can’t get car insurance — it just means you need a smarter approach. Focus on improving your credit, paying annually when possible, and working with insurers who understand your situation.
To start comparing fair quotes, visit our comparison guide or explore specialist high-risk providers in the UK.
Frequently Asked Questions
Can I get car insurance with a bad credit score?
Yes. Specialist insurers in the UK offer cover to drivers with bad credit. Paying annually can help avoid finance rejections or extra interest.
Do insurers check my credit when I buy car insurance?
Only if you choose monthly payments. Paying your policy in full avoids hard credit checks.
Does bad credit make insurance more expensive?
It can, mainly through higher APR on monthly instalments. Your base premium usually depends on driving history, not credit score.
Can car insurance improve my credit rating?
Yes, if you pay monthly on time. Each successful payment helps build a positive credit history over time.