Will Getting An Insurance Quote Hurt Credit
Getting an insurance quote is an essential step in securing the best insurance policy for your needs. However, many people are concerned that getting an insurance quote may hurt their credit score. In this article, we will explore whether getting an insurance quote can hurt your credit score and how you can protect your credit score while shopping for insurance.
What is a Credit Score?
A credit score is a three-digit number that is used by lenders to evaluate a borrower's creditworthiness. It is calculated based on several factors, including payment history, credit utilization, length of credit history, and types of credit used. Your credit score can range from 300 to 850, and the higher your score, the more likely you are to be approved for credit and offered favorable terms.
How Insurance Companies Use Credit Scores
Insurance companies use credit scores to determine the likelihood that a policyholder will file a claim. Studies have shown that people with lower credit scores are more likely to file claims than those with higher credit scores. As a result, insurance companies use credit scores as a factor in determining insurance rates. However, it's important to note that not all states allow insurance companies to use credit scores in this way.
Soft Inquiries vs. Hard Inquiries
When you apply for credit, lenders will typically check your credit report to evaluate your creditworthiness. This is known as a hard inquiry and can temporarily lower your credit score. However, when you get an insurance quote, the insurance company will typically only do a soft inquiry. A soft inquiry does not affect your credit score and is only visible to you on your credit report.
Protecting Your Credit Score While Shopping for Insurance
If you're concerned about your credit score, there are steps you can take to protect it while shopping for insurance. First, only apply for insurance quotes from reputable companies that you're interested in doing business with. Second, try to get all of your insurance quotes within a short timeframe. This will minimize the impact of any potential credit score fluctuations. Finally, keep an eye on your credit report and dispute any inaccuracies that you find.
The Bottom Line
Getting an insurance quote typically does not hurt your credit score, as insurance companies typically only do a soft inquiry. However, it's important to protect your credit score while shopping for insurance by only applying for quotes from reputable companies, getting all of your quotes within a short timeframe, and monitoring your credit report for inaccuracies.
