Do Car Insurance Quotes Affect Your Credit Score?

How Car Insurance Quotes Affect Your Credit Score

Requesting car insurance quotes won't affect your credit scores at all. When you ask for a quote, the insurer may pull your credit reports and use the information to help tailor your results. But during this process, insurers use a "soft" credit pull, which is a type of inquiry that doesn't affect your credit scores.

Here's an overview of soft versus hard inquiries:

• Hard credit inquiry: Hard inquiries appear in your credit report when your credit is checked as a result of a formal application for a credit card or loan. As part of the application process, creditors routinely view the information in an applicant's credit reports to decide approval and to set credit terms. Each hard inquiry can have a small, temporary negative effect on your score.
• Soft credit inquiry: A soft inquiry isn't related to a specific credit application. It may happen for several reasons, including an insurance company providing a policy quote. Soft inquiries won't affect your credit scores.

Learn more: Do Auto Insurance Companies Consider Your Credit Score?

Why Do Car Insurance Companies Check Your Credit Score?

In most states, insurance companies consider your credit history when you request a quote, apply for coverage or renew a policy. The insurer uses a type of score called a credit-based insurance score, which is different from the type of credit scores lenders use. This type of score helps the insurance company predict the likelihood of you filing claims.

An insurance company generally can't deny you insurance based only on your credit-based insurance score. But the score might influence your ability to get or renew your policy and the rate you pay.

A regular credit score is similar because it's also based on the information in your credit reports. But it's generally designed to help lenders predict whether you'll repay a loan as agreed. Insurance companies likely won't check your traditional credit score.

Which States Use Credit-Based Insurance Scores?

Credit-based insurance scores can be used in 43 states and Washington, D.C. The other seven states restrict auto insurance companies from using a policyholder's credit history when offering coverage, renewing a policy or deciding how much to charge.

But the details may differ in each state. For example, auto insurers in Maryland can use your credit history to help set the rate on a new policy, and companies in Michigan may consider your credit when deciding which installment payment options to offer. Hawaii, California and Massachusetts forbid insurers from using credit histories at all.

The seven states that either limit or forbid credit-based insurance scores are:

• California
• Hawaii
• Maryland
• Massachusetts
• Michigan
• Oregon
• Utah

How to Get Car Insurance Quotes

Every insurance company has its own menu of coverage options and a different way of setting rates. So the best way to find cheap car insurance is to get multiple quotes and compare them. To get a true apples-to-apples comparison, use the same coverage options and limits across all quotes. Also check out each company's car insurance discounts and special offerings.

You can typically go to an auto insurance company's website to get quotes manually. You'll be asked questions about your vehicle, your driving history and all others who will be included on your insurance policy.

Be prepared to provide the following information when you start reaching out to insurance companies for quotes:

• Personal information such as date of birth, phone number, address and marital status
• Driver's license number
• Names and birth dates for all those who live with you
• Home addresses and addresses where vehicles are stored
• Vehicle information including make, model, estimated weekly mileage and vehicle identification number (VIN)
• Information about your current policy to make a reliable comparison

Using a car insurance comparison service can speed up the process and help you find the right policy for your needs. After answering questions about your car, driving history and current car insurance plan, you'll get personalized quotes to look through. Experian's car insurance comparison tool will even help you with additional details, like canceling your old policy and requesting a partial refund if possible.

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The Bottom Line

When you request a car insurance quote, your credit score won't be affected. That's because insurance companies typically pull your credit using a soft inquiry when creating a quote for you. And in states that restrict credit-based insurance scores, insurers may not pull your credit at all.

If you're shopping for car insurance, using a comparison tool can help you save time and find the best policy for you.