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Will Getting an Insurance Quote Hurt my Credit Score

If there's one rule when it comes to insurance, it's that you should always shop. Prices for your home and auto insurance can be dramatically different across a set of 10 carriers. This is because each company has different underwriting standards, risk appetite, and rating factors. One such important factor that many carriers use to price your risk is your Insurance Score. This typically takes into account the following:

  • Accident and Insurance Claims History
  • Your Credit Score

Insurance Scores vs Credit Scores 

The credit score most people talk about is the FICO credit score and is based on your ability to repay a loan. Your insurance score is weighted differently than your FICO score. An insurance score predicts the likelihood of you becoming involved in a future accident or insurance claim, and each carrier uses this information in their own way to adjust your insurance rates.

Insurance companies pull your credit using a "Soft Hit", which does not affect your credit score. When you apply for a loan, a bank or lender will use a "Hard Hit" on your credit, causing a temporary drop in your credit score.

  • Soft Hit: this occurs when a person or company checks your credit report as a background check, like when you check your credit score or a mortgage lender pre-approves you for a loan. Or when an insurance company wants to send an insurance quote. 
  • Hard Hit: this occurs when a prospective lender checks your credit report to make a lending decision. these can slightly lower your credit score and will typically stay on your credit report for two years. One or two of these does not have a large affect over time, but if you start have 3 or more stacking up, they can keep your credit score lowered for the 2 year duration until they roll off. 

How Insurance Scores Affect Your Rates

It's worth noting that not all insurance companies change their prices based off the insurance scores. For most carriers, as you would expect, the higher your insurance score, the better your rates.

Favorable insurance factors might include things like:

  • No claims filed in the last 5 years
  • Long established credit history
  • No payments or past due accounts
  • Low use of available credit
  • Numerous open accounts in good standing

Unfavorable insurance factors might include things like:

  • Claims filed in the last 5 years
  • Collection accounts
  • Numerous past-due payments
  • High usage of available credit
  • Many recent applications for credit

In summary, you don't need to worry about an insurance quote affecting your insurance score or credit score. But keep in mind, your insurance/credit score will often be a big part of your insurance rate. If you recently brought your credit score up a few notches, its worth a reshop. Get as many insurance quotes as you can - your credit will not be affected.

At your service,
Young Alfred