Getting insurance quotes does not affect your credit score, so you can comparison shop for car insurance coverage as much as you want. Your credit won’t be affected, no matter how many quotes you get. Car insurance companies do check credit reports to give quotes, but they use a “soft pull.” Unlike a hard inquiry, soft pulls do not affect your credit score. Lenders checking your credit history after the fact won’t even be able to see the soft-pull inquiries from auto insurance companies on your credit report, though they’ll be visible to you.
Car insurance companies do not need a hard pull because they are not lending customers money. Instead, they use the soft pull to determine a driver’s auto insurance score.
Your auto insurance score is used to predict the odds you’ll file a claim, while your credit score is used to predict the odds you’ll default on a loan. Car insurance companies have found that people who are less responsible with credit also tend to have more accidents. They use these patterns to calculate a three-digit number based on information from your credit report, such as your:
- History of on-time payments
- Credit limit usage
- Total debt
- History of foreclosure, bankruptcy, or collections
There are a few exceptions to this, because Hawaii, California, and Massachusetts don’t allow credit history to affect car insurance. But for most Americans, having bad credit or no credit can cost you when it comes to car insurance premiums. For example, people with no credit pay an average of 67% more for car insurance than people with excellent credit, nationwide, according to WalletHub research. And the impact of below-average credit will affect drivers’ car insurance premiums much more in some states than others.
Fortunately, many states have laws prohibiting insurance companies from denying coverage, canceling an existing policy, or increasing rates based solely on credit-based information.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines
. This question was posted by WalletHub.
Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.