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Build Credit

Does Getting Insurance Quotes Affect Credit In 2020?

By Sa El

Credit expert, licensed Insurance agent, Real Estate agent, and Co-Founder of Credit Knocks

Advertiser Disclaimer - Some links on this page may pay us advertising fees.

Summary: Learn if getting an insurance quote can affect your credit score in 2020. 

Going through the process of buying any insurance can be very overwhelming and extremely frustrating.

Also it doesn’t help if you are worried about it affecting your credit score. 

But did you know: 

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Your credit score does have an effect on the final outcome of your insurance rates. Still, only certain insurance products affect your score.  

In this post, I will help you understand if getting an insurance quote will affect your credit, what other things may or may not affect your score, and how an insurance credit score works.

Do Insurance Quotes Hurt My Credit?

The fast answer is No.  When you get an insurance quote (depending on the product), you will receive an inquiry on your credit report; this inquiry doesn’t hurt your score.

So, you can take a deep breath and shop around for as many quotes as you would like, no matter how many you get, your credit score won’t be affected.

You will be able to see these inquiries on your personal credit report. Still, they won’t do anything to your score, and lenders can’t see these types of inquiries on your credit.

Do All Insurance Companies Check My Credit?

No, primarily because not all insurance products require your credit to be checked. 

When applying for insurance, usually the only products that check your credit will be property and casualty products like: 

  • Homeowners Insurance
  • Car Insurance
  • Renters Insurance

However, your insurance score and credit score will not be checked for life and health insurance products such as:

  • Life Insurance
  • Health Insurance
  • Dental Insurance
  • Disability Insurance

And keep in mind: 

Even though your credit is reviewed, it isn’t the type of inquiry that can affect your credit score. 

Below we will discuss the two different types of inquiries and how they work.

Quick Note:

You should do as much research and read all reviews before deciding on a credit repair company.  You should base your decision on what's offered and your specific situation.

Two Primary Types Of Inquiries

When dealing with credit, there are two types of inquiries that you can get on your credit report. One is called a “hard pull,” and the other is a “soft pull.”

Hard Inquiry (hard pull)

Whenever you actively look to obtain new credit by completing an application, you will receive a hard pull.

The lender will use this hard pull on your credit to review your report and make a decision on your application.

It’s basically an indicator that you are currently looking for credit, and that will lower your credit score.

Soft Inquiry (soft pull)

Getting a soft pull on your credit happens typically when you check your own credit or creditors want to send you pre-approval offers.

If you find yourself receiving a ton of those, it’s because lenders are soft-pulling your credit and noticing you qualify for their cards.

Mostly when you aren’t actively seeking new credit, it will be a soft inquiry. 

The reason insurance quotes fall under the “soft pull” umbrella is because you aren’t actually seeing to obtain new credit.

Even though you get a quote or fill out an application, you just want insurance.

Also, you might not know this, but there is an actual credit-based “insurance score” that is separate from the scores used to determine your eligibility for credit.

Quick Tip:

Soft inquiries will never hurt your credit score, be sure to always ask if your credit will receive a hard pull or soft pull before you submit any applications.

What’s An Insurance Score?

An insurance score is exactly what it sounds like. It’s a credit score that is only used when you attempt to get a quote or purchase a specific type of insurance, as we discussed above. 

The goal of these scores is to help an insurance company predict the likelihood of a customer’s future claims on an insurance policy.

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Insurance Score Factors

Your insurance score is still a 3 digit number, and it’s created by also using factors from your credit report such as: 

  • How long ago you have applied for any kind of credit
  • Your history of on-time payments.
  • How your credit mix looks - the type of accounts
  • The amount of available credit you have
  • Are there any bankruptcies on your report
  • Your credit history
  • If you have accounts in collections

Now, some companies use their own internal insurance scoring formula based on the data they gather. 

However, there is some information that isn’t used when calculating an insurance score which will be things like: 

  • Your Gender
  • Marital status
  • Current Age
  • Ethnicity
  • Annual Income
  • Home Address

Now, of course, your age, marital status, and where you live are all parts of determining the cost of your insurance policy.

However, they have nothing to do with your insurance score.

What Factors Hurt My Insurance Score?

Oddly enough, most of the same things that can hurt your standard credit score can affect your insurance score. 

However, it will affect it in different ways and levels of severity. 

Some things that can hurt your insurance score are: 

  • Making late payments
  • Using a high amount of your available credit
  • Applying for many new credit accounts
  • Having accounts in collection

How Can You Improve Your Insurance Score?

You guessed it, by doing the exact opposite of what can hurt your score, you can increase your insurance score. In general, keeping good credit habits will help you to improve your score.

Some things that could help increase your score are: 

  • Having open accounts in good standing
  • Building a long credit history
  • Keeping your credit utilization low
  • Having no missed or late payments

Overall it comes down to being educated on how to manage your individual credit properly

The better you are at that, the better your personal credit score and insurance credit score will be. 

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Actions That Can & Can’t Hurt Your Credit

It’s essential to understand the actions that could actually hurt your credit and when you don’t need to really worry about your credit being affected, below is the list: 

Actions That Will Hurt Your Credit

  • Apply for a personal loan
  • If you apply for a credit card
  • When you apply for a mortgage
  • Any application for an Auto Loan

Actions That Won’t Hurt Your Credit

  • An Employer checking your credit
  • Checking your own credit
  • Getting an insurance quote
  • Any soft inquiry request (credit limit increases)
  • Requesting an insurance quote through an agent bot.

This list should help protect you when you are trying to determine if an action you take will or won’t hurt your credit.

Just remember, stay away from anything that says “hard pull” if you want to protect your score. 

Taking Action

Your credit score won’t be affected just by getting an insurance quote; however, your rates can absolutely be affected.

To make sure you get the best rates, you should work on building your personal credit score so that it can help increase your insurance score.

You should read about what’s a good credit score and also how to build your credit to assist you on your journey.

Remember, your credit-based insurance score won’t be the only factor affecting your rate, but it can be one less thing you have to worry about.

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