Poor credit could boost your car insurance rates by almost $2,000

Drivers with poor credit may pay an average annual rate that is $690 higher, compared to drivers with good credit, according to NerdWallet.

"Interestingly, we found many states where the rates for people with poor credit were higher than the rates for people who had caused a car accident," NerdWallet's Amy Danise says.

Getting into an accident isn't the only thing that could cause your car insurance rates to skyrocket.

Even something as simple as paying your credit card bill late can boost your rate, as underwriters often look at credit-based insurance scores to gauge the likelihood that you will file a claim.

Drivers with poor credit may pay an average annual rate that is $690 higher, compared to drivers with good credit, according to NerdWallet. Credit scores generally range from 300 to 850, with the average American's FICO score — a model popular among lenders — hitting 699 in April 2016.

By comparison, if you were unfortunate enough to be a driver held responsible for an accident, you could face an average increase of $446, according to NerdWallet.

Affordability issues

"Interestingly, we found many states where the rates for people with poor credit were higher than the rates for people who had caused a car accident ," said Amy Danise, an insurance expert at NerdWallet. "This shows the importance insurers put on credit as a way to predict whether you'll make a claim."

Hefty rate increases are a cost that some Americans simply can't afford. A study from the Treasury Department's Federal Insurance Office found that more than 18.6 million Americans live in areas where car insurance is unaffordable. That study defined "unaffordable" as amounting to more that 2 percent of the median household income for that area.

If you're a resident of Michigan with poor credit, your rate spikes an average of $1,969 more than drivers with good credit, according to NerdWallet. 

Residents of California, Hawaii and Massachusetts may count themselves lucky because those states don't allow credit to be used to set car insurance rates.

"Ultimately the regulation of auto insurance companies and rates is determined by each individual state," said Loretta Worters, a vice president at the Insurance Information Institute. "State insurance departments determine the minimum coverage level required to drive legally in the state."