Does getting a car insurance quote hurt your credit score?
February 13, 2020
Credit scores. The mysterious system we use in the United States to gauge credit worthiness (here is thetechnical definition). Most of us are loosely familiar with credit scores and the role they play in our financial lives. If you’ve ever applied for a credit card, loan or even a house, you're likely pretty familiar with the role credit plays. Not to mention, your credit score potentially gets dinged with every loan application.
It begs the question, "what about when I apply for car insurance?” And, “does getting a car insurance quote hurt your credit score?” We’ll answer those questions simply, and give you more than you bargained for with a little extra on some common credit terms.
Does car insurance pull your credit when you get a quote?
Short answer? Yes, in most cases car insurance companies will pull your credit when you get a quote. But most companies will use a “soft inquiry” as you go through the quote process, which means that it won’t impact your credit score—like a hard inquiry.
Soft inquiry: may not change credit score
Hard inquiry: may change credit score
Does credit score affect car insurance?
Your credit score typically won’t impact your insurance premium or rate. At HiRoad we do use certain credit characteristics to make decisions in the insurance application process. Similar to any other car insurance, your HiRoad quote won’t hurt your credit score, but may show up as a “soft inquiry” on your credit report.
Does getting an auto insurance quote hurt your credit?
While you may see a "soft inquiry" when you get an auto insurance quote, soft inquiries are not related to a specific application for new credit. Soft inquiries are recorded on your credit report so you can see who has inquired about your credit history. But, it's the hard inquiries, those resulting from a lender checking your credit before making a lending decision, that ultimately affect your score—something that doesn't typically come up in a car insurance quote.
Terms to know about insurance and credit reports
Car insurance can be confusing, and when you add the layer of credit to it—let’s just call it a day. But to help you navigate both worlds, here are some helpful terms to keep in mind as you go through a car insurance quote:
Credit report: Think of it like a report card. It’s a comprehensive record of your credit history and serves as a credit reference.
Credit score:Think of it like your GPA. Your credit score is calculated by an algorithm that measures your creditworthiness based on the information in your report at one point in time.
Hard inquiries: Hard inquiries (also known as ‘hard pulls’) generally occur when a financial institution, such as a lender or credit card issuer, checks your credit history when making a lending decision. They commonly take place when you apply for a mortgage, loan or credit card, and you typically have to authorize them. A hard inquiry has the potential to lower your credit score.
Soft inquiries: Soft inquiries (also known as ‘soft pulls’) typically occur when a person or company checks your credit history as part of a background check or for other permissible purposes. This may occur, for example, when a credit card issuer checks your credit without your permission to see if you qualify for certain credit card offers. Your employer might also run a soft inquiry before hiring you.
Hint: car insurance quotes generally fall into the soft inquiry category because it likely won’t affect your credit score. And because it won’t affect your credit score, look at HiRoad and get your car insurance quote here.The information in this article was obtained from various sources not associated with HiRoad®. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. HiRoad is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. HiRoad makes no guarantees of results from use of this information.
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