Do car insurance quotes affect your credit score?

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Here's what you need to know...
  • Insurance providers may look at your credit score when offering quotes for a policy
  • However, your credit score is not negatively affected by getting an insurance quote
  • Every time an insurance provider accesses your credit report, an inquiry is added to your personal report
  • This personal credit report is not provided to lenders, meaning these inquiries are not visible to them
  • The inquiries are only listed on your report to provide you with a record of who has accessed your credit report

Your credit score provides potential lenders a picture of how responsible you are when it comes to paying back your loans and managing your debts.

While your potential insurance providers may review your credit score when quoting your coverage, these inquiries do not affect your credit score. This means you can receive multiple car insurance quotes without risking your credit rating.

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What is your credit score?

Your credit score is a picture that potential lenders, or in this case insurance providers, use to understand more about how you handle loan payments and managing your debts. This score can be affected by late payments, loan defaults, the length of your credit history, or other factors.

Your credit score can be improved by managing your debts appropriately and using credit or loans responsibly.

You can check your credit score for free each year due to regulation through the Federal Trade Commission.

The three nationwide credit reporting agencies, TransUnion, Equifax, and Experian, are required under federal regulation to provide you a copy of your credit report each year. You can get more information about this through the Federal Trade Commission.

How do insurance company inquiries affect your score?

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Any potential insurance provider may look at your credit score to get an idea of how you’ve handled your debts over the last several years.

Every time an insurance provider requests a copy of your credit report, an inquiry is placed on your personal credit report. This report, although it is a history of your creditworthiness, does not get sent to potential lenders or creditors.

Why do insurance companies look at your credit score?

Your credit score and history are of interest to any potential insurance provider for several reasons. Any potential provider will want to make sure you are a good risk for them to insure, that you’ll pay your bills on time, and the potential that you’ll file a claim.

First off, insurance companies are a risk based business; meaning they want to insure risks that are likely to earn them more than they will pay out.

This means that any potential insurance provider wants to provide you coverage, but they want you to be a good investment over the length of time you are a policyholder.

Additionally, insurance companies want to make sure that you’ll pay your bill on time.

Your credit score will provide a picture of how often you pay your bills on time or how many late payments you make. This helps any potential insurance provider determine if you are likely to make your premium payments on time.

Finally, insurance companies are always looking for ways to predict whether their policyholders will file a claim or not.

Insurance providers have discovered that individuals that manage their finances well are often more responsible in other aspects of their lives. This may lead to fewer claims being filed by the prospective policyholder, meaning fewer claim settlements for the insurance provider.

Shopping for Car Insurance

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Your credit score is just one of the snapshots of who you are as a borrower, which may be a factor in how your insurance provider quotes your coverage.

However, when your provider checks this score, they are not leaving a lasting impact on how lenders or creditors view you. When you’re shopping around for car insurance quotes, you can shop safely knowing that your credit score will not be altered by all the quotes you’re receiving.

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