Does Insurance Quote Affect Credit Score?

Does Insurance Quote Affect Credit Score? The quick answer is no. In the state of California, insurance companies are not even allowed to factor your credit score.

Across the nation, most insurance providers closely analyze credit reports and credit scores as part of their underwriting process. They argue that data shows those with lower credit tend to file more claims on average. As a result, customers with poor or mediocre credit often get quoted much higher rates than those with excellent credit histories.

But not so in California. Here, insurance companies are mandated against even considering a person’s credit score or pulling their credit report when determining policy pricing and eligibility. That means your current FICO score, past late payments, bankruptcies or other credit blemishes can’t be used to inflate your rates or deny you coverage.

For California drivers and homeowners, this regulation provides important consumer protections. You won’t get penalized with higher insurance costs due to factors that may be out of your control, like medical debt, identity theft issues impacting your credit, or the lasting effects of an expensive divorce. Your ability to get affordable auto and home insurance coverage rests solely on more concrete risk factors like your driving record, claims history, the vehicle you drive, and so forth.

If you are reading this blog article from a different state, please check your specific state laws on if insurance companies can ask for your credit report. Even if you are required to provide a credit report, consider the 5 following points:

  • Getting insurance quotes does not directly affect or impact your credit score. Insurance companies do need to check your credit report when providing quotes, but this is done through a “soft pull” or “soft inquiry” which does not lower your credit score.
  • A “hard pull” or hard inquiry on your credit report, which can temporarily lower your credit score, only occurs if you actually apply and get approved for a new insurance policy after getting quotes.
  • Most states allow insurance companies to use credit scores/history as one factor in setting insurance premiums, as studies show lower credit is linked to higher claim risk. However, a few states like California prohibit this practice.
  • When getting quotes, the insurance companies are just reviewing your credit report data, not pulling your full credit score. Getting multiple quotes from different insurers within a typical shopping period will register as just one soft inquiry.
  • Insurance companies are generally upfront that they will check credit as part of the quoting process, but clarify that it is just a soft pull that has no impact on the customer’s actual credit score.

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