Does getting an auto insurance quote hurt your credit score?
Does getting an auto insurance quote hurt your credit score? Although car insurance quotes don’t affect your credit score, your credit score does affect your insurance rates. 95% of auto insurance companies check credit and use it to determine risk. Learn how your credit score impacts rates here.
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Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
UPDATED: Oct 18, 2023
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Oct 18, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- In most states, car insurance carriers can use a driver’s credit report to determine their premium
- Having simply okay or even poor credit can contribute to you paying a higher premium
- Studies show drivers with lower credit scores are more likely to file claims and get into accidents which are riskier for the insurance carrier
- Drivers can take steps to help improve their credit score, which can decrease the car insurance rates that they pay over time
Most drivers are aware that a car insurance carrier will check their driving record before offering them a policy and providing them with a quote.
However, some do not know that many carriers will also check your credit score to help determine your policy premium. While this may come as a surprise, car insurance companies do so to help protect their interests.
If you have imperfect or horrible credit, you may be worried about finding a car insurance quote that you can afford. The good news is that using an online price comparison allows you to compare several different insurance companies, policies, and rates all in one convenient place.
Start compiling your options so you can select the policies that work best for you, no matter your credit score. Enter your ZIP code into our free comparison tool to get started.
Auto Insurance Carriers Can Legally Check Credit
At first glance, the practice of a car insurance company checking your credit report or score may seem possibly illegal or like an invasion of privacy. Many consumers wonder why the insurance company needs to know about a driver’s credit history.
However, in most states, it is legal. FICO reports that approximately 95% of car insurance carriers check credit and use it to determine risk classifications for underwriting in states where they are legally allowed.
The result of this process is a credit-based insurance score. A poor or just okay credit score could have a negative impact on your car insurance rate. Car insurance companies will look at several different items on your credit report to help them determine your premium, including:
- Payment history, which accounts for about 40% of your credit-based score
- Length of credit history, accounting for approximately 15% of your total score
- Accounts in collections, if any
- Outstanding debts account for another 40% of your insurance score
- Any previous bankruptcy filings
- New credit inquiries account for about 10% of your insurance score
- Finally, credit mix will account for about 5% of your insurance score
Fortunately, you can improve your credit score to decrease auto insurance rates.
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Why Credit Matters for Auto Insurance Quotes
While many consumers are unaware of this fact, car insurance companieshave been utilizing credit reports and scores to help determine rates for over two decades. Auto insurance carriers claim that these pieces of information are a reliable indicator of the risk they are assuming by insuring a driver.
Various studies reveal that drivers with higher credit scores are less likely to file claims, while drivers with lower credit scores are at a higher risk to have accidents and filing claims.
Some car insurance carriers do not use credit scores to determine car insurance rates, although, most do.
Information That Can’t Be Used To Determine a Credit-Based Insurance Score
Auto insurance companies can’t use certain information to determine your insurance score, including:
- Age
- Income
- National Origin
- Race
- Color
- Gender
- Marital status
- Employment, occupation, and income history
- Where you live
- What interest rates you pay
- Rental agreements
- Child or family support obligations
- Certain types of inquiries into your credit report, such as account review inquiries, pre-employment or promotional inquiries
However, many of these factors are used to determine auto insurance rates.
Getting Auto Insurance Quotes Doesn’t Hurt Credit Scores
Unlike applying for various lines of credit, such as an auto loan, a home mortgage, or a new credit card, getting car insurance quotes will not have an impact on your credit score.
In fact, it shows up as a “soft pull,” which means you are usually the only one who can see it.
These soft pulls which also include employment credit checks, promotional offers, and a credit report, do not affect your credit score or report like a hard pull (i.e., applying for credit).
No matter how many quotes you obtain on auto insurance policies, you can be assured that your credit score will not be affected.
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Hardship Exemption
These exemptions are designed to help people who have recently faced extraordinary life circumstances, such as:
- Unemployment
- Identity theft
- Divorce
- Serious illness
- Death of a spouse
Your auto insurance company can’t use hardship exemptions against you.
How To Improve Your Credit Score
If you are someone who has less than perfect credit, you may be interested in improving your credit score to achieve better auto insurance premiums. While this is an achievable goal, it will not happen overnight.
Consider the following ways of improving your credit score:
- Get current and stay current on any outstanding debts
- Avoid applying for new lines of credit whenever possible
- Pay your bills on time
- Keep low balances on your credit cards
- Do not close unused credit accounts
- Obtain a copy of your credit report and verify it for accuracy
- Dispute inaccuracies you might find
It can be frustrating to learn that your credit score could be negatively impacting the amount you pay for car insurance. However, many consumers are relieved to find out that getting car insurance quotes does not show up on their credit reports or has an effect on their credit scores.
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To improve the car insurance premium that you pay, try using an online price comparison tool. Comparing rates and finding one that you can afford has never been easier than with our online comparison tools. Just enter your ZIP code below to get started.
Frequently Asked Questions
Does obtaining an auto insurance quote impact my credit score?
No, simply requesting an auto insurance quote typically does not affect your credit score. Insurance companies usually perform a “soft” credit check, which does not have a negative impact on your credit score. These soft inquiries are not visible to other lenders or credit reporting agencies.
What is a soft credit check?
A soft credit check, also known as a soft inquiry or soft pull, is a type of credit inquiry that does not affect your credit score. It is a preliminary review of your credit history that doesn’t involve a full examination of your creditworthiness. Insurance companies commonly use soft credit checks when providing quotes or underwriting policies.
When does a credit check impact my credit score?
Your credit score can be affected when you apply for credit, such as a loan or credit card, where the lender conducts a “hard” credit check. Hard inquiries can slightly lower your credit score, typically by a few points, and they remain on your credit report for about two years.
Can obtaining multiple insurance quotes impact my credit score?
Not necessarily. When you shop around for auto insurance and request multiple quotes within a short period, the credit bureaus understand that you are comparing rates and seeking the best deal. As a result, multiple inquiries from insurance companies made within a specific timeframe (typically 14-45 days, depending on the credit scoring model) are often treated as a single inquiry, minimizing any potential impact on your credit score.
Are there any exceptions when an auto insurance quote can affect my credit score?
While rare, some insurance companies may perform a hard credit check when providing quotes or underwriting policies. It’s crucial to ask the insurance provider about their credit check policy before requesting a quote if you’re concerned about a potential impact on your credit score.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.