Does a car insurance quote affect your credit score?

The short answer is no. Car insurance quotes do not affect your credit score. However it is one of the factors used to determine the premium you will pay.

Car insurance
  • In this short 6 minutes read article, we shall answer:
  • Do car insurance quotes affect your credit?
  • Do they pull your entire credit report
  • Why do they care about your credit

Car insurance quotes you get online do not affect your credit score. Think about it, you are not borrowing any money from the bank with a repayment plan. Your entire credit profile follows you around and determines many financial situations. The better your credit score, the lower the premium in most cases.

What is a soft pull?

When getting a new job, some employers also, just like car insurance companies, do a credit pull. Your credit report may record this inquiry but it does not affect your score.

The opposite of a soft pull is when a bank does a hard pull.  All your loans, debts and repayment history and more are shown in this report. Soft pulls are credit checks that you don’t ask for so they don’t have an impact on your credit scores.

Why do they care about your credit report?

People’s scores were found to accurately predict the risk and or the likelihood of a person filing a claim. This is according to a 2007  Federal Trade Commission report.

However, in some states, it is illegal to only use credit scores to determine premiums. It has to be used together with other factors to determine insurance rates.

What impacts your credit score?

Insurance companies look at the information on your credit history from credit bureaus and calculate your insurance score. This is how they assess your risk profile. All are trying to do is determine how likely you are to file a claim or not file a claim. 

What are some of the factors that affect your credit score?

Favorable factors include:

  1. Long credit history. Ten years of credit story is better than four.
  2. How many credit accounts you have open that are in good operational status
  3. If you pay your bills on time or not. Late fees and penalties
  4. Fewer addresses. How often do you move?

 

Unfavorable factors may include:

  1. High levels of current debts
  2. A short credit history
  3. Many or multiple credit inquiries over a certain duration
  4. How many accounts that are in collection or any that are past due on repayments

 

What can I do to improve my auto insurance score and have lower car insurance premiums?

Ultimately it comes down to practicing good credit management. Follow the favorable factors listed above and you will most definitely get a higher credit score resulting in lower car insurance premiums. We hope our short article has answered the question; does a car insurance quote affect your credit score?

What should you do next? Two things:

  1. Get an updated latest credit score.
  2. Get a new car insurance quote. It takes a few minutes and saves you money.

 

 

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