Do Insurance Quotes Affect Your Credit Score?

Getting an insurance quote doesn’t affect your credit scores. When an insurer checks your credit for a quote, it’s a soft inquiry, which doesn’t count against you, so you can compare as many quotes as you like. Your credit can still affect the quote itself, though. In most states, insurers can use a credit-based insurance score, built from your credit report, to help set your price.

Why insurance quotes don’t affect your credit scores

An insurance quote isn’t an application for credit. Federal law lets an insurer review your credit report when you ask it to insure you, so the check is a soft inquiry. It’s the same kind of check that happens when you look at your own credit or get a prequalified offer, and soft inquiries don’t count toward your credit scores.

Here’s how that compares with the hard inquiry a lender runs:

Hard inquiries only happen when you formally apply for credit. One stays on your report for two years, but FICO Scores only count inquiries from the past 12 months.‍

Read more >> Do Car Insurance Companies Check Your Credit Score?

What is a credit-based insurance score?

A credit-based insurance score is a number insurers calculate from the information on your credit report. It’s built from the same report as your FICO and VantageScore credit scores, but it’s used for a different purpose:

• Credit scores predict how likely you are to repay a loan or other credit as agreed.
• Credit-based insurance scores predict how likely you are to file a claim.

Most states let insurance companies consider your credit when determining your eligibility for coverage and your premium. FICO estimates that about 95% of car insurers and 85% of homeowners insurers use credit-based insurance scores in pricing calculations, where it’s allowed.

Some states limit or ban this, including:

• Maryland — insurers can’t use credit for homeowners insurance.
• Massachusetts and Hawaii — insurers can’t use credit for car insurance. Home policies can still use it.
• Oregon and Washington — credit can’t be the only reason an insurer turns you down, and having no credit history can’t count against you.

These rules change often. Check with your state insurance department to see what’s allowed where you live.

Read more >> How Your Credit Score Impacts Your Car Insurance Rates

‍What if your credit raised your quote? If an insurer charges you more or turns you down because of your credit, it has to tell you and name the credit bureau it used. Get that bureau’s report free at AnnualCreditReport.com. If something’s wrong, you can dispute it with the bureau for free.

What other factors determine your insurance rates?

Insurers also look at:

• Your driving record. For car insurance, accidents and tickets can raise your rate, especially recent ones.
• Your claims history. Filing several claims, especially recent ones or ones close together, can raise your rate.
• Where you live. Areas with more crime or severe weather can mean higher home and car insurance rates.
• What you’re insuring. Cars that cost more to repair or replace usually cost more to insure, and your home’s age and construction can affect homeowners rates.

Read more >> How to Lower Your Car Insurance

Bottom line

Getting an insurance quote won’t affect your credit scores, so you can compare as many as you like. In most states, though, the same credit report behind your credit scores also feeds the insurance score that helps set your price.

That report is built from accounts that report your payments each month. With Kikoff’s Credit Account, your plan is your first purchase on the account, and each monthly payment toward it is reported to Equifax, Experian, and TransUnion. There’s no credit check to sign up, and plans start at $5 a month.