Do they check your credit score for auto insurance? (2024)

Do they check your credit score for auto insurance?

How much your score affects your rates varies between states. Four states — California, Hawaii, Massachusetts and Michigan — ban companies from using your credit report to determine insurance rates. Instead, companies in these states base rates on your driving record, location and other characteristics.

So, if you're worried about car insurance companies pulling your credit negatively impacting you, rest assured they only do a soft pull. Credit takes into account hard inquiries which are things like applying for loans.

Your credit score plays an integral part in determining the rate you pay for car insurance. Better credit often gets you a better rate, and worse credit makes your coverage more expensive. Our research found that poor credit can double insurance rates.

Insurance quotes do not affect credit scores. Even though insurance companies check your credit during the quote process, they use a type of inquiry called a soft pull that does not show up to lenders. You can get as many inquiries as you want without negative consequences to your credit score.

Most major car insurance companies like GEICO, Progressive and State Farm factor in your credit score when giving you a quote. However, if you live in California, Hawaii, Massachusetts, or Michigan, you're in luck—these states don't allow credit history to affect your auto insurance rates.

Yes, Geico does use your credit score as a factor when determining your car insurance rates, as do most major insurers. However, credit checks by auto insurers do not harm your credit score and are only done in states where it is legal for your credit score to affect your rates.

How a Soft Credit Check Works. Financial institutions and creditors may want to know whether you are managing your debt and credit history effectively. Creditors might also want to know information such as the number of late payments or your credit usage, such as how much you have borrowed on each loan or credit card.

Can I 'fail' a soft credit check? Don't worry, you can't 'fail' a soft credit check. With a soft search, you're not actually applying for anything – so it won't result in a lender's decision.

What is the best insurance for people with bad credit? The most affordable auto insurance for drivers with bad credit is from Nationwide, GEICO or USAA, according to our research.

Can you be denied car insurance due to your credit history?

California

Insurance companies in California don't use credit-based scores or your credit history for underwriting or rating auto policies, or setting rates for homeowners insurance. As a result, your credit won't impact your ability to get or renew a policy, or how much you pay in premiums.

Most insurance companies using credit information will include it as a factor in determining your rate. For example, someone with a relatively high credit score may pay a lower premium than someone with a relatively low credit score.

Most insurers use credit checks to create a credit-based insurance score to help set your rate. Some insurers provide auto insurance with no credit check, which might seem appealing if you have a poor credit history.

Are insurers completely free to access and use your credit history? A few states prohibit insurers from using consumer credit information – California, Massachusetts and Hawaii for auto insurance and Maryland and Hawaii for homeowners insurance.

According to the III, if you have a better credit-based insurance score, an excellent driving history, and zero claims on your record, you'll typically qualify for lower rates. This score is only one of many factors used to calculate your premium.

The short answer is no. There is no direct affect between car insurance and your credit, paying your insurance bill late or not at all could lead to debt collection reports. Debt collection reports do appear on your credit report (often for 7-10 years) and can be read by future lenders.

For example, if your FICO score is below 580 and you live in a state where credit use is restricted, you'll pay approximately 15% more in premiums than someone with a FICO score between 740 and 799.

An insurance score is a score calculated from information on your credit report. Credit information is very predictive of future accidents or insurance claims, which is why Progressive, and most insurers, uses this information to help develop more accurate rates.

Yes, Allstate does use your credit score as a factor when determining your car insurance rates, as do most major insurers. However, credit checks by auto insurers do not harm your credit score and are only done in states where it is legal for your credit score to affect your rates.

Most insurance companies use your credit history to help them decide whether to sell you insurance and how much it will cost.

What is the best car insurance for bad credit?

Cheapest car insurance companies for drivers with bad credit

Based on our research, Geico, Nationwide, Mercury, American Family and Travelers are some of the cheapest major providers for drivers with bad credit.

To determine the loan's annual percentage rate (APR) or the interest rate plus origination and other fees, a car dealership, bank, or credit union checks your credit score. Different lenders can check different credit scoring models, and the same lender might receive several scores.

Generally speaking, switching car insurance companies won't affect your credit score.

Soft inquiries do not affect credit scores and are not visible to potential lenders that may review your credit reports. They are visible to you and will stay on your credit reports for 12 to 24 months, depending on the type.

You can request annual credit reports for free from each of the 3 major reporting agencies—Experian, Equifax^® and TransUnion^®—online via www.annualcreditreport.com or by calling 1-877-322-8228.