Getting car insurance quotes doesn't usually hurt your credit score. Insurers typically use a soft credit check when you're just getting quotes, which doesn't impact your credit. And while insurers look at your credit history, they don't use the same score a lender would pull for a mortgage or loan. They rely on a specific type of credit score called a credit-based insurance score to help determine your rates.
Do Car Insurance Quotes Affect Your Credit Score?
Updated: July 16, 2024
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Key Takeaways
Getting car insurance quotes doesn't typically affect your credit score, as most insurers use soft credit checks for quotes.
Credit-based insurance scores, used by most states to determine rates, differ from the credit scores lenders generally use.
Factors like driving record, vehicle type, location and coverage level also influence car insurance rates.
What Is a Credit Score?
A credit score or credit-based insurance score is a number that helps predict your likelihood of filing a car insurance claim. Insurers use this score and other factors, like your driving record, to determine your rates.
The credit score your car insurance provider pulls is different from the one a lender would use for a mortgage or loan. While they both assess your financial responsibility, the credit-based insurance score focuses on predicting insurance-related risks.
While credit bureaus like Experian, Equifax and TransUnion provide these scores, insurers may also use their own proprietary models. Factors considered in these scores include your:
- Payment history
- Outstanding debt
- Credit utilization
An excellent credit-based insurance score typically translates to lower car insurance premiums, as insurers perceive you as a lower-risk customer.
How Car Insurance Companies Check Your Credit
Insurers usually do a quick "soft pull" check, peeking at your credit report without leaving a trace. This helps them see how responsible you are with money without affecting your credit score.
There are two types of credit inquiries: soft inquiries and hard inquiries.
- You request a car insurance quote online or through an agent.
- You use a comparison tool to get quotes from multiple insurers.
- An insurer preapproves you for a policy.
Soft Inquiries
Soft credit checks don't affect your credit score. They are a way for car insurance companies to get a quick snapshot of your financial health when shopping for quotes. You won't even know they're happening and won't show up on your credit report for other lenders to see.
These inquiries are invisible to other lenders and don't even show up on the credit reports they use to assess your applications. Soft pulls are often used when:
You can freely use online car insurance calculators, work with an independent agent or even contact insurers directly to gather quotes without worrying about any negative impact on your credit.
Hard Inquiries
Unlike soft inquiries, hard credit checks can lower your score. These checks may happen when you formally apply for a policy with monthly payments, as the insurer wants to assess your creditworthiness before extending you credit, similar to a small loan.
The impact is usually minor compared to other factors like late payments, and not all insurers check credit for monthly installments.
States That Don’t Use Credit Score as a Factor
In most U.S. states, insurers can use a credit-based insurance score to help determine your car insurance premiums. However, there are a few exceptions where this practice is not allowed:
If you live in one of these states, your insurer will not use your credit information to calculate your rates. Instead, they'll focus on other factors like your driving record, location and the type of car you drive. Even in states where credit-based insurance scores are allowed, remember that they're just one factor among many that insurers consider.
Other Factors Affecting Car Insurance Rates
Your credit score isn't the only factor determining your car insurance premiums. Insurers consider a variety of other elements when calculating your rates, ensuring a comprehensive assessment of your overall risk profile. These factors collectively provide a detailed picture of your driving behavior, vehicle specifics and environmental influences, among other aspects.
Here are some of the primary factors that can impact your car insurance premiums:
Driving Record
Insurers analyze your driving record to determine your likelihood of filing a claim in the future. You'll likely pay more for car insurance if you have a recent history of speeding tickets, at-fault accidents or a DUI.
Vehicle Type
Your car's make, model, year and safety features all contribute to your insurance rates. For example, a Subaru Forester, one of the cheapest cars to insure, typically costs 18% less per year to insure than a Tesla Model Y.
Location
Your location plays a significant role in determining your rates. Urban areas with higher traffic density and crime rates generally have higher premiums compared to rural areas.
Coverage Levels
Your desired types of coverage and how much insurance you need directly impact your costs. Comprehensive coverage, for instance, will be more expensive than liability-only coverage.
Your driving record, vehicle, location and coverage level all play a role in determining your insurance risk profile — not just your credit score. If your credit history is a concern, focus on improving these other factors to potentially lower your premiums.
FAQ About Car Insurance Quotes and Credit Scores
Here are some answers to frequently asked questions about how car insurance quotes and your credit score interact:
Does getting a car insurance quote hurt your credit?
Getting car insurance quotes doesn't typically hurt your credit. Most insurers only use soft credit checks when providing quotes, which don't affect your score. Your credit score is only impacted if you formally apply for a policy and the insurer performs a hard inquiry, which usually only happens if you opt for monthly payments.
Do insurance companies run your credit for a quote?
Many insurance companies run your credit when you request a quote. However, this is usually a soft credit check, which doesn't affect your score.
Does unpaid car insurance go on your credit?
Unpaid car insurance can affect your credit score. While insurers don't report your premium payments to credit bureaus, they may send unpaid premiums to collections. Once a debt goes to collections, it can appear on your credit report and negatively affect your score. Paying your premiums on time will help you maintain good credit and avoid issues with your policy.
About Mark Fitzpatrick
Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.
sources
- Department of Insurance and Financial Services. "Michigan’s New Auto Insurance Law." Accessed July 16, 2024.
- National Conference of State Legislatures. "States Consider Limits on Insurers’ Use of Consumer Credit Info." Accessed July 16, 2024.
- The General Court of the Commonwealth of Massachusetts. "Section 4E." Accessed July 16, 2024.
- Insurance Division of the State of Hawaii Department of Commerce and Consumer Affairs. "What You Need to Know About Auto Insurance in Hawaii." Accessed July 16, 2024.