Car Insurance With Bad Credit in Texas

Can a Texas insurer charge me more for bad credit?

Yes, on a new policy and at renewal. Most big insurers in Texas turn your credit report into a “credit-based insurance score.” That is a number meant to predict how likely you are to file claims, not whether you repay loans. A low score can put you in a higher price tier. Our guide to how credit affects rates covers the national picture.

How much more? Published estimates disagree, and the gap depends on the insurer. For a 40-year-old with full coverage, MoneyGeek (October 2026) shows $148 a month with good credit and $350 with bad credit. Insurance.com (September 2026) shows an average of $2,631 a year for full coverage against $5,305 with bad credit.

NerdWallet’s October 2026 full-coverage figures for a 35-year-old are lower and uneven. Auto Club of SoCal goes from $112 to $188 a month, and GEICO from $210 to $304. Allstate’s median is $237 in both lists. So the same score can cost you nothing at one company and a lot at another.

One popular page says Texas lets insurers use credit “without restriction.” That is wrong. The next section shows why.

What can a Texas insurer not do with my credit?

Texas allows credit scoring, with limits. The Texas Department of Insurance (TDI) calls its rules among the strongest in the country. Here is what the law blocks:

• Drop you on credit alone. An insurer must weigh at least one other factor that is not credit. Credit plus another reason can still lead to a nonrenewal, so read any notice closely.
• Count some items against you. Medical-industry collections, credit checks you did not start and insurance checks are off limits. Several mortgage or car-loan checks within 30 days count as one.
• Punish a thin file. If you have no credit history, the insurer needs loss data to hold that against you. Otherwise it must treat you as neutral or ignore credit. Having no credit card cannot by itself lead to a worse deal. This matters for young drivers.
• Use an old report to raise your price. Since 2026, the report must be no more than 90 days old when it triggers a worse deal.
• Keep its formula secret. Insurers file their scoring models with TDI, and the filings are public. Anyone can ask TDI for a copy through an open records request.

One thing Texas does not do is cap the gap. The rule only says a price difference caused by credit must rest on sound actuarial principles and data filed with TDI.

Will my score affect me at renewal in Texas?

It can, and that changed in 2026. For policies issued or renewed on or after January 1, 2026, your insurer must refresh your credit at least every three years. It then has to re-rate you and adjust your premium. Before that, the bill’s sponsor said insurers did not have to update a score after the first check.

This works both ways:

• Your credit got worse. Your premium can rise at the next refresh, and the insurer may check sooner than three years.
• Your credit got better. At renewal, you or your agent can ask for a new credit check and re-rate. The insurer must do it, once in any 12-month period.

An insurer that already has you in its best-priced tier does not have to re-check. TDI proposed adding this right to its Auto Bill of Rights in May 2026 and adopted it in September 2026. Insurers must hand out the new version from January 1, 2027, but the law itself is already in force.

Which life events can reduce my credit penalty?

Texas lets you ask for an exception if one of five events directly hurt your credit:

Send the request in writing. The insurer can ask for documents it can verify. If it agrees, it uses only the credit data the event did not touch, or gives you a neutral score. It does not have to repeat an exception for the same event. It may also consider events that are not on the list.

If you think an exception was refused unreasonably, you can complain to TDI.

What will my insurer tell me when credit raises my price?

When credit played any part in a worse deal, the insurer must send you a notice within 30 days. A worse deal includes a higher premium or a different deductible than you applied for. The notice must:

• give up to four main reasons, in specific terms (“poor credit” alone does not count);
• name the credit bureau and say the bureau did not make the decision;
• say you can get a free copy of your report within 60 days and dispute errors;
• tell you about your right to ask for a re-rate, where it applies.

At application, you should also get a disclosure form. It says whether credit is pulled for other people in your household, and the insurer must name each person whose credit it used. If your spouse’s report was used, you will know.

How do I fix a credit error and get money back?

Texas ties your insurer to the credit dispute process. Dispute the error with the bureau, which has 30 days to investigate. If the report is corrected, tell your insurer. It must re-underwrite and re-rate you within 30 days, then make any needed adjustment. Any overpayment is credited back for the last 12 months or the policy period, whichever is shorter.

Example. Your March renewal jumps from $1,500 to $1,950 a year. A letter lists two reasons, including a collection account that is not yours. You dispute it and the bureau removes it. You send the result to your insurer. If the new rating drops your price to $1,600, you would be credited roughly $350 for the year. These numbers are made up to show the steps.

Are there Texas insurers that do not use credit?

Few appear on the list. TDI’s April 2026 list of personal auto insurers that answered its data call has 34 company entries that use credit. They include State Farm, GEICO, Allstate, Progressive and USAA. Some use credit alone to set a rating factor. Others mix it with other variables. Two answered that they do not use it: American Access Casualty and the Texas Automobile Insurance Plan Association (TAIPA). The list is partial, so others may skip credit too.

TAIPA is the state’s last-resort plan. To qualify, you must live in Texas or have a vehicle registered here, and certify that two companies turned you down in the past 60 days. It sells only annual policies and only state-minimum limits, and it adds charges for accidents and tickets. Treat it as a bridge, not a first choice. See the Texas minimum coverage page for what those limits cover.

Common mistakes

• Phoning in an exception request. The law says it must be in writing.
• Letting coverage lapse. A gap can cost more than the credit penalty, and Texas requires insurance to drive. If a state office now requires proof of coverage on file, see the Texas SR-22 page.
• Waiting for the insurer to notice. Your better score only counts after a re-check, so ask at renewal.
• Closing your oldest card. TDI lists account age and amounts owed among the items in an insurance score.
• Quoting only one company. Each insurer weighs credit its own way.

What to do next

1. Pull your free credit reports at AnnualCreditReport.com. The bureaus offer them weekly. Look for accounts that are not yours and medical collections.
2. Find your insurer’s notice or renewal letter and note its listed reasons.
3. Dispute any error with each bureau. Send the corrected report to your insurer and ask for a re-rate and refund.
4. If a life event hurt your credit, mail a written exception request with proof.
5. After your credit improves, ask in writing for a re-rate at renewal. You can do this once a year.
6. Compare quotes from at least three insurers. See our guide to lowering your car insurance bill and the Texas cheap car insurance page.
7. If an insurer ignores these rules, call the TDI Help Line at 800-252-3439.

Bottom line

If your credit is the reason for a high quote, you have real tools in Texas: written reasons, error fixes with refunds, a yearly re-rate request and life-event exceptions. If nothing in your report is wrong, shop several insurers, because the credit penalty ranges from none to large. If no standard insurer will cover you, TAIPA exists, but it is costly and basic.