Insurance companies check your credit score to assess the risk they will take to insure it. Studies have indicated that people with lower credit scores are likely to file more claims or have more expensive insurance claims, while people with higher credit scores are less likely to do so. Insurance quotes don't affect credit ratings. Although insurance companies check your credit during the quote process, they use a type of inquiry called a “soft request” that isn't presented to lenders.
You can receive as many inquiries as you want without negative consequences for your credit rating. This is because the insurance company isn't looking at your real score; it's just using information from your credit report. This information may be different from what you see when you visit the website of an insurance provider, insurance agency, or insurance company. Since getting multiple insurance quotes won't affect your credit rating, check several insurance companies to make sure you're getting the best rate.
California, Hawaii and Massachusetts have laws that prevent insurers from using credit history to set insurance rates. However, since there are many factors that influence the cost of car insurance and insurers use different qualifying factors to calculate the price, premiums vary considerably depending on the state, the insurance company and the policyholder. Most auto insurance companies will look at your credit report and use your credit rating and credit history as a single factor when setting premiums. Once you apply for insurance coverage, you authorize the insurer to obtain your credit and other information it needs to calculate your premium.
This is why insurance companies ask so many questions when giving insurance rate estimates. Auto insurance companies in most states use the applicant's credit score and credit history to calculate their premium. Depending on the state and the insurer, some people can pay an average of 67 percent more in premiums for their car insurance than people with excellent credit. According to WalletHub, a car insurance rating is a rating that insurance companies use to predict if someone is likely to file a claim.
The insurance company can also obtain a copy of your driving record, your previous insurance claims, and your credit history. Looking up prices and comparing car insurance rates can help you save money and get the best coverage for your needs. While qualifying factors vary by insurance company, here are eight common factors that can influence the price you pay for car insurance.