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Does Getting a Car Insurance Quote Hurt Your Credit?

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This article is sponsored by The General.

car driving on road at sunset
Photo: Pexels

There are a lot of misconceptions about auto insurance quotes and their effects on your credit score. In this article, we will clarify all insurance quotes myths, as well as shed some light on insurance costs.

Can car insurance quotes hurt your credit?

When you apply for an insurance plan, you may need to have a credit check. That might be a scary prospect since you’ve probably heard that having your credit checked has a negative effect on your credit score.

What auto insurance companies actually do is perform a “soft pull” search inquiry on credit score. They look into your past credit record to ascertain payment compliance and find a quote that suits you.

Although the inquiry has zero effect on your score to lenders, it is still visible on your personal credit reports.

Why do they need to perform a credit score search?

There are a lot of reasons for the search and one of them is to enable them to determine the risks of insuring you. Apart from risk calculation, the search also determines the right premium based on costs.

Recent studies by insurance experts have indicated that people with lower credit scores have more costly insurance claims than those with high credit scores.

Besides, car owners with low credit scores are more likely to file insurance claims more often. Therefore, automotive owners are advised to maintain a high credit score by maintaining positive finance habits.