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Car insurance and credit checks: A guide to how your credit score impacts insurance

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When searching for a policy, you may wonder if getting car insurance quotes could negatively impact your credit rating. And does a poor credit score mean higher premiums or even rejection?

Our guide delves into credit scores and insurance premiums, including how they’re linked and how it will influence costs and policy options.

Do car insurance companies check your credit?

Insurers conduct soft credit checks when generating initial quotes. A soft check allows the insurance provider to review the report and how you manage credit. This to confirm identity and residence, but won’t impact your overall credit rating.

Hard credit checks only happen if you choose to pay monthly instalments. Financing insurance premiums this way requires a full credit assessment like any other loan application. A hard check shows if you’ve previously applied for credit. It will also cause your rating to drop slightly each time a hard check is performed.

Will car insurance quotes affect my credit score?

Simply getting quotes doesn’t affect your credit score or rating at all. Soft checks during the generation of policy prices have no bearing on your overall credit file.

These searches don’t appear on your credit reports that lenders reference when reviewing applications. Only hard credit checks from loan or financing applications appear and are considered.

So, there’s no need to worry about comparison shopping reducing your credit rating. Get as many quotes as you want from various insurers without credit consequences.

The exception is if you finance your premiums through monthly instalments rather than a single annual payment. We’ll look at the implications of this next.

Does my credit score affect car insurance quotes?

While getting quotes doesn’t impact your credit, your credit profile does influence the premiums that insurers offer you.

Statistics show that motorists with poor credit scores typically have higher claims rates. Insurers charge increased premiums to compensate for this perceived higher risk.

Exact mechanisms vary by provider. In general, excellent credit means lower quotes, while adverse credit leads to higher premiums. Improving your rating can reduce insurance costs.

Your credit score helps indicate your financial responsibility. So, insurers incorporate it into their overall risk assessment to set suitable prices.

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How can I check my credit score before applying?

It’s easy to examine your credit profile before requesting insurance quotes by performing any of the following:

  • Sign up for free monitoring from ClearScore or Credit Karma – no credit card required
  • Purchase complete reports from Experian or Equifax for comprehensive data
  • Use a free trial with providers, such as Experian, to get temporary access
  • Many banks offer free credit file checks for account holders
  • Obtain your statutory credit report for free from each of the credit reference agencies

Checking reports will provide your latest score and full information submitted to lenders such as loans, credit cards and addresses. This helps you understand what insurers see when setting premium amounts.

How can I get cheap insurance with bad credit?

Here are some tips for reducing premiums if you have a low credit score:

  • Shop around extensively. Comparing deals could provide bigger savings if you have bad credit
  • Accept a higher excess to lower the insurer’s risk and premiums
  • Pay annually, rather than monthly, to avoid extra fees
  • Limit your cover to third party only or reduce your mileage if better rates are offered
  • Add an experienced driver, such as your partner or parent, as the primary policyholder if their credit is better than yours
  • Choose the cheapest car in the lowest insurance group to minimise the base premium
  • Investigate specialists who offer quotes without credit checks
  • Consider a black box policy to demonstrate safe driving habits

While bad credit increases costs, paying annually prevents your credit from worsening further as well.

Car insurance credit check FAQs

It’s rare to be declined altogether. However, you may be offered limited cover options and higher premiums reflective of the perceived risk associated with a bad credit score.

Paying on time monthly can help build a better credit score, but missing a payment will negatively impact your rating. Paying annually will ensure you don’t miss a payment and will prove cheaper than paying monthly.

Usually not, but providers may do soft searches to confirm details, such as address and occupancy.

Only the policy owner/primary driver goes through credit screening. However, adding an experienced driver can help offset poor personal credit scores.

Nick Jones

Editor in Chief

Nick Jones is a highly experienced consumer journalist and editor, who has been writing and producing content for print and online media for over 25 years.

He has worked at some of the UK’s leading publishers including Future Publishing, Highbury Entertainment, and Imagine Publishing, with publications as diverse as Homebuilding & Renovating, TechRadar, and Creative Bloq, writing and editing content for audiences whose interests include history, computing, gaming, films, and science. He’s also produced a number of podcasts in the technology, science, gaming, and true crime genres.

Nick has also enjoyed a highly successful career in content marketing, working in a variety of topics such as health, technology, and finance, with market-leading global companies including Cisco, Pfizer, Santander, and Virgin Media.

Now the Editor-in-Chief of the Independent Advisor, Nick is involved in all aspects of the site’s content, where his expertise in finance, technology, and home products informs every article that’s published on-site. He takes a hands-on approach with our VPN content, penning a number of the articles himself, and verifying that everything we publish in this topic is accurate.

Whatever the area of interest he’s worked in, Nick has always been a consumer champion, helping people find the best deals and give them the information they need to make an informed buying decision.