A poor credit score can make it harder to borrow money. It can affect agreements such as mortgages, mobile phone contracts and even credit cards, but what about car insurance? Here, we discuss the impact of bad credit on getting cheap car insurance, including the price you're quoted and whether you can pay monthly.

ClearScore is a credit broker, not a lender.

Do car insurance providers check my credit report?

Yes, insurers usually check your credit report. They can carry out one of two types of check:

Soft search

Running a soft search means the insurer will simply use your credit information to check your personal details. For example, your name, age and address. If an insurance provider (or any other lender) carries out a soft search on your credit report, other lenders can't see it and it doesn't affect your credit score. Only you (and the credit reference agency) can see it.

Hard search

This is the opposite of a soft search, so insurers and lenders will look at your credit report with more scrutiny. Lenders do this in order to work out whether you’re likely to pay back what you owe. It means they’ll go into much greater detail and check if repayments were made on time or otherwise.

Unlike soft searches, hard searches leave what’s called a ‘footprint’ and other lenders will be able to see that a search has been carried out. Most hard searches stay on your credit report for 12 months. Several hard searches in a short period can lower your score for around six months, and lenders may take this into account when you apply for credit.

How do insurers decide whether to run a soft search or hard search?

If you choose to pay for your car insurance annually, insurers will usually only run a soft search to verify your personal details.

However, if you want to pay for annual cover in monthly instalments, the insurer may carry out a hard search. This is down to the fact that you’re essentially making a credit agreement, where the insurer agrees to provide you with annual cover on the promise that you’ll pay them each month.

Can my credit rating affect car insurance costs?

When it comes to calculating your premium, insurers will consider a number of factors, for instance, your age, address and the type of car you have. So, while a poor credit score can affect what you pay for car insurance, it’s not the only consideration.

Some insurers take credit information into account when pricing a policy, so a poor credit history may affect the price you're quoted.

If you decide to pay for your policy in one lump sum, the price you’re quoted is the price you’ll pay (plus any extras you agree to). Many insurers charge interest if you pay in instalments, which means you pay more over the year than if you paid upfront. Some offer monthly payments at 0% APR. In its premium finance market study (final report, February 2026), the FCA reported APRs at the start of 2026 of 16.5% for insurers, 23.5% for intermediary lenders and 29.4% for intermediary brokers.

Can I pay for car insurance monthly with bad credit?

Paying monthly may be possible with a poor credit history, but not every insurer offers it to every applicant. Each insurer sets its own criteria, and some may take a previous cancellation for non-payment into account. Eligibility and acceptance are decided by each lender and depend on its own criteria and checks. Checking your eligibility does not guarantee that you'll be accepted.

It’s worth remembering that if you want to pay in monthly instalments, a hard search may be carried out on your credit report. Your policy will also cost more in total as you’ll be paying interest too (if the APR is more than 0%).

Could paying for my car insurance monthly improve my credit score?

Paying on time and in full each month can potentially help build a positive credit history, if the agreement is reported to credit reference agencies (the provider can tell you). But late or missed payments can lower your score and may stay on your report for up to six years.

Can I be refused car insurance if I have bad credit?

Each insurer decides whether to offer cover using its own criteria. A low credit score may affect the price you're quoted and whether monthly payments are available (and at what cost). Insurers may also take a previous policy cancellation into account.

Should I check my own credit rating?

Checking your credit report regularly can help you spot mistakes.

In the UK, there are three main credit reference agencies (CRAs) that collect and record credit data: Equifax, Experian, TransUnion. These independent companies gather information from lenders, public records, and utility providers to build your financial profile, though they each use distinct proprietary systems to assess your risk.

Each agency uses its own scale. Experian scores run from 0 to 1,250 (since November 2025) and Equifax scores from 0 to 1,000. TransUnion is moving from 0–710 to 0–999 between late September 2026 and June 2027, so you may see either scale for now. Not every lender shares the same data with all three agencies, so your score and report can differ between them. Lenders use their own scoring systems and lending criteria, alongside credit report information and other details. The score you see from a credit reference agency is not necessarily the score a lender uses.

To stay on top of your credit record, you can check your credit score and record for free with ClearScore.

If something on your report is wrong, even a small error such as a misspelt name, raise it with the credit reference agency. If the error came from a lender or another organisation, you may need to contact them too. You can also add a notice of correction to explain an entry. If the problem isn't resolved, you can complain to the Information Commissioner's Office (ICO).

How can I buy cheap car insurance with bad credit?

Where interest is charged on monthly payments, paying upfront costs less overall. According to the ABI's motor insurance premium tracker, the average premium paid in April–June 2026 was £566 (published 29 July 2026). This is a market average, and individual quotes vary. In June 2026, Which? reported some insurers charging APRs of 29.9% to pay monthly. It noted some customers were paying interest rates similar to credit cards, where the median purchase APR was 25% at the end of April 2026.

A no-claims discount usually grows with each claim-free year, up to a limit set by the insurer.

Comparing quotes from several insurers shows the range of prices available to you. This guide doesn't cover every insurer or policy in the market.