Do Insurance Quotes Impact Your Credit Score?

man checking his credit score, your credit score and insurance are connected

Do Insurance Quotes Impact Your Credit Score?

Find out how your credit score and insurance are connected.

If you are shopping for car insurance, then requesting quotes from different insurers is part of the process.  However, many drivers are worried that applying for insurance quotes will impact their credit score.  But is this really the case?  Here’s how your credit score and insurance are connected.

Insurance Quotes Don’t Impact Your Credit

Contrary to popular belief, requesting insurance quotes does not lower your credit score like applying for credit does.  This is because, when insurance companies check your credit, they do not use the same information that lenders and credit card companies do.  Instead, they just use information that’s readily available on your credit report to generate your credit-based insurance score.

Credit-Based Insurance Score

These scores are used to predict how likely you are to file an insurance claim.  Credit-based insurance scores are calculated based on information on your credit report, including:

  • How recently you applied for credit, such as a loan or credit card
  • Your payment history
  • The portion of your credit card limits that you actually use
  • The number, types, and ages of loan and credit accounts that you have
  • The amount of debt that you have
  • Whether you have accounts in collections, past foreclosures, and/or past bankruptcies

How Your Credit Affects Your Insurance

While applying for insurance quotes has no impact on your credit; your credit actually affects your insurance quote.  This is because individuals with better credit will have lower insurance rates.  People with poor credit can expect to have higher insurance rates.  This is because insurance companies use your credit to determine your risk.  According to insurance providers, people with poor credit are seen as less likely to pay their premiums and more likely to drive recklessly and get into an accident.  As a result of this risk, insurance companies will charge more to protect themselves.

This is how your credit score and insurance are connected.  Do you have further questions about your auto insurance?  If so, then contact the experts at Staybull Insurance.  Our dedicated team is eager to assist you with all your car coverage needs today.

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