In most cases, getting quotes from different auto insurance companies and comparing them can be one of the most effective ways to find the right coverage plan for your car. However, if you’ve heard that getting an insurance quote can have an effect on your credit score, you might be reluctant to get quotes from different insurers to find the perfect deal.
Fortunately for those who want to get their ideal auto insurance plan, quotes don’t tend to affect your credit score – but it can often work the other way around.
Why do insurance companies check your credit score?
Almost any insurer will want to take a look at your credit score, as it can often help them to determine how much of a risk it will be to insure you – and the more of a risk they think you will be, the more they’re likely to charge you.
If you have a high credit score, there’s a good chance that you’ll have a lower premium than those with a lower score. When getting a quote, keep in mind that an insurer is likely to need other information to decide on how much it would cost to keep you insured, such as your age, gender, the car you drive, and more.
Can a car insurance quote hurt your credit score?
Generally, an insurance company will want to take a look at your credit score when deciding on a quote– but this isn’t usually a cause for worry, since their inquires don’t tend to have any negative effects. Since these types of reviews are often only visible on your personal report, lenders won’t usually be able to see that a review was made, so it’s unlikely to be taken into account in any lending or credit score calculations in the future.
Because of this, it usually won’t make a difference how many insurance quotes you decide to get – your credit score shouldn’t be affected by doing so.
What about credit-based insurance scores?
These days, many car insurance companies in the U.S use credit-based insurance scoring to help them to determine the risk of a potential customer – and in most cases, they have good reason for using this method. Around 90% of insurers are likely to want to take a look at your credit-based insurance score when you apply for a policy, or ask for a quote. But will this endeavor have an effect instead? Luckily the answer is also no, so it should be safe for you to ask for more than one.
Often, an insurer will use your credit-based insurance score try and determine the likelihood of insurance claims you may make in the future. This kind of score is different from your regular credit score, and is a three-digit number which is decided on by information on your credit report (such as how much you owe on all accounts across your credit report).
Because of this, it generally has nothing to do with your credit score, so you probably won’t have to worry when an insurer uses this method to establish your eligibility.
Can you improve your insurance-based credit score?
If your credit score is less than perfect, you’ll be glad to hear that there are often quite a few things that you can do to make it better – and in most cases, this will help you to get a better deal on your auto insurance.
In most cases, the best place to start is to request a report of your insurance-based credit score. Often, this will give you an idea of what factors lead to your overall score. Fixing late payments, paying bills on time, and paying off any debts you have are a few of the ways that you could try to improve your score. While it can often take time to rebuild a credit score, it can often be well worth it to invest time in doing so.