Do Insurance Quotes Affect Your Credit Score

insurance quotes

By Taylor Milam

Shopping for insurance is stressful. Whether it’s car insurance, life insurance, home insurance or even renters insurance, there’s a lot you need to consider when you’re searching for a policy. And if you’re like most Americans, your number one insurance priority is finding the best deal.

Even though the shopping process is stressful, there’s one thing you don’t need to worry about while you shop for policies: your credit score. That’s because insurance quotes do not affect your credit score, and you can apply for some quotes without credit.

According to Experian, one of the three major credit bureaus, insurance quotes do not affect your credit score:

“An inquiry will be added to your credit report each time an insurance company accesses your credit report. But, the inquiries will have no effect on your credit score or lending decisions. Insurance inquiries are only shown on your personal credit report. They are not provided to lenders, so they are not considered in credit score calculations or lending decisions.”

Most insurance providers are making a soft inquiry, not a hard inquiry. In a nutshell, it means a potential insurer can view the information on your credit report, but their access won’t hurt your credit.

What is an insurance quote?

Insurance quotes are estimates of what you might for pay for insurance from a particular company. The most common types include homeowner’s insurance, car insurance and life insurance. Most people apply for multiple quotes to make sure they get the best deal on their insurance rate.

For example, you might apply for car insurance quotes from car insurance companies A and B. Based on the information you submitted, Company A might offer you car insurance premiums for $100 per month. Company B might offer you the same insurance coverage for $150 per month.

Shopping around ensures that you secure the best deal. Chances are you’ll choose Company A’s auto insurance policy when you have all the information to look at, but if you had only Company B’s quote, you never would’ve known you could save $50 per month. You could apply that savings , which you could use toward your car payment, student loan or some other loan you might have.

The “perfect” number of quotes

It’s easy to get sucked into applying for a large number of insurance quotes, especially when you are trying to find the best deal. But there’s no “perfect” number of quotes you should aim for.

Gordon Conwell III, a high risk life insurance specialist at American Term explains:

“There’s no right or wrong amount of quotes to get when it comes to shopping for [insurance], and everyone’s different in this regard. One person may want ten quotes, but another may want two. Many [insurance] websites ... have a quoting tool to get instant quotes which will enable anyone to get numerous quotes from lots of different insurance companies.”

Applying for “too many” quotes won’t impact your credit, but depending on the type of insurance you’re applying for, insurance companies might view a lot of applications as a red flag.

As a general rule, Conwell usually has clients apply to two or three companies, at most.

“Simply getting [insurance] quotes has absolutely no impact on credit score. Formally applying to many different insurance companies won’t affect your credit score, but can be a ‘red flag’ when the [life] insurance companies see that you’re applying to more than one or two companies. Some people try to ‘stack’ policies or buy several different policies immediately after finding out or believing they have a health issue and insurance companies are very aware of this,” says Conwell.

Improve your credit and ... get better insurance premiums?

According to a study on the state of car insurance in 2019, by increasing your credit score just one tier – from good to great, for example – you could save about 17% on car insurance. In fact, drivers with poor credit can pay more than double what drivers with exceptional credit pay, depending on what state they live in.

Why? Because drivers with lower credit scores are more likely to file insurance claims and typically cost car insurance companies more money, according to a study by the Federal Trade Commission. In other words, having good credit can help lower your insurance premiums because the insurance company knows you’re not a risk.

So before you seek out a new car insurance – or other insurance coverage – quote, check your credit report and look into your options for building better credit history. After all, it could save you big time over time.

Bottom line

Even though insurance quotes do not affect your credit score, your score might impact your quotes. It could also indicate to insurers the likelihood that you’ll be able to make your monthly payments.

In other words, a high credit score could lead to cheaper insurance options and a low credit score might mean that you have to pay more. That’s why it’s important to understand your insurance credit score.

When it comes to your money, knowledge is power. The more you know about finances, the more money you can save.

About the Author

Taylor Milam is a personal finance writer who has also written for Credit Karma, Chime, Acorns, and Policy Genius, among others.

Written on April 25, 2019

Self is a venture-backed startup that helps people build credit and savings.
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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