Does a Car Insurance Quote Affect My Credit Score?
Car insurance premiums can be one of your most costly month-to-month expenses.
And having bad credit will only make those payments more than usual. A bad credit score, too, can disqualify you from specific discounts.
Or, in some cases, coverage altogether.
But, does shopping for insurance affect credit scores? Generally speaking, not really. That doesn’t mean you shouldn’t care about your credit score when shopping for car insurance.
Related: how to dispute a repossession?
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Why Do Car Insurance Companies Need to Know My Credit Score?
Your credit score is like your financial goodwill: it shows lenders how responsible you are with lines of credit. This means that car insurance companies will need your credit score.
People with scores in the 700s can expect to save money on their premiums. Drivers with poor scores in the low 600s or 500s can expect to pay a higher amount for the same coverage.
Before applying for a car insurance policy, it’s a good idea to look at your credit report. Check for any mistakes and make sure everything’s in good order.
Related: Credit Karma Review
So, Does a Quote Impact My Score?
An insurance company you’re looking to get a policy quote from will ask for a copy of your credit score. An inquiry and “pull” will be added to your credit report each time an insurance company requests your credit report. These inquiries don’t affect your credit score because they’re classified as a “soft pull.”
A soft pull occurs when credit companies would like to send you pre-approved offers. They are also done when insurance companies want to see your credit score number and report. Potential employers may ask for a soft pull on your credit, too.
Regardless of why a company did a soft pull, they mean you aren’t actively seeking out credit. And because of that, they do not affect your credit score whatsoever.
Is it Important to Have Good Credit When Shopping for Car Insurance?
Having a good credit score while shopping for car insurance will ensure the rates you’re offered are at their lowest. Companies like GEICO and State Farm state that they do review credit scores when quoting for future policies. If your credit shows past financial mistakes and derogatory remarks, your premium may be offered at a higher rate.
By keeping your credit score and report in good shape, you can help keep your premiums down. In the end, it could save you hundreds or thousands of dollars a year.
Get Your Credit Score Up, and Save on Future Premiums
Having a good credit score will make your financial life more comfortable. When shopping for car insurance, a good score will save you money. If your score could use some help, consider doing these steps to build your score up:
- Pay your bills on time when they’re due
- Pay off past debts from collection agencies.
- Dispute any mistakes on your credit report.
- Make sure your available credit line isn’t entirely used.
- Hire a Service (How Most Credit Repair Services Work)
Even though car insurance quotes won’t affect your credit score, make sure your credit rating is excellent. It could be the difference between you paying higher premiums or not.