Does Getting an Auto Insurance Quote Hurt Your Credit Score?

Yesterday we wrote about how to compare auto insurance rates online. One question that has come up is whether getting an auto insurance quote will lower your credit score. Car insurance companies today routinely pull your credit report and use your credit score and history as one factor in setting premiums. As we’ve discussed in the past, your credit history affects your finances in many ways, and car insurance premiums are a good example of this. The higher your score, the lower your premiums.

Here’s how Progressive explains the use of credit scores in its underwriting process:

Credit has been proven to be a very powerful and independent predictor of future accidents or insurance claims. The use of credit history provides an additional predictive factor — one not offered by other factors such as driving record, vehicle type, age, etc. In fact, Progressive data shows that consumers with the worst insurance scores are twice as likely to have an accident or insurance claim as those with the best scores.

But getting an auto insurance quote generally does not affect your score because insurance companies do what’s called a “soft pull” on your credit. There are two types of credit inquires, called a “soft pull” and a “hard pull:”

  • A soft pull, also known as an involuntary inquiry, occurs when creditors want to send you pre-approved offers. That credit card solicitation you received in the mail was probably the result of a soft pull on your credit. Potential employers may check your credit as do your existing credit card accounts, both of which would be soft pulls. And if you check your own credit score, that’s considered a soft pull, too. The key is that a soft pull does not affect your credit score in any way.
  • A hard pull, also known as a voluntary inquiry, occurs anytime you actively seek credit and fill out an application. The lender will run your credit report and determine whether to approve your credit application and under what terms. A hard pull on your credit report will affect your credit score.

So the question is whether a car insurance carrier’s review of your credit history results in a hard or soft inquiry. In reviewing the websites of several major auto insurance companies, they report that their inquiry is a soft pull that does not affect your credit score. Although the inquiry is not involuntary (it results when you seek an auto insurance quote), it’s not because you are seeking credit. As a result, it makes sense that the inquiry would not lower your score.

If you spend any time on forums about credit, however, you’ll hear about individuals who say a car insurance company performed a hard pull on their credit. While one can’t rule this out, it seems unlikely to me. What is more likely is that the individual sees the soft pull on their credit and assumes that it’s a hard inquiry because it’s visible to them on their credit report. Nevertheless, if you believe that an insurance quote resulted in a hard inquiry, leave a comment below sharing your experience with us.

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Published or Updated: February 16, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Daddy Paul says:

    Thank you for explaining what to me had been a very gray area.

  2. HateToDisagree says:

    A couple of months back, I used netquote to see how my car insurance rates compared to other companies. Don’t believe the “instant quote” hype associated with these types of services. In return for me divulging my information, I received an automated “thank you” and then telephone calls for the next two weeks from every insurance agent in the local area. Needless to say, I was not pleased. To rub a little salt into the wound, I just found out that I now have eleven inquiries on my credit report.
    I don’t know if they are “soft pulls” or “hard pulls,” but I do know for a fact that I filled out ONE quote request, and now have 11 separate inquires that show up. I can’t speak for the veracity of the rest of the article, but I can unequivocally state that “…only one inquiry results on your credit score. They are able to use that one inquiry to generate multiple insurance quotes from various insurance carriers.” does not hold true as of 3/30/2010.

    • DR says:

      HateToDisagree, you will see the inquires, but they should be soft pulls. Anyway, sorry to hear about the bad experience.

  3. Unhappy Janet says:

    I am in the same boat as Hate to disagree. Although, a slight difference to the story. With me, someone entered my information (unknown how obtained) on several different agent data base sites. Now for the last 2 weeks I have been bombarded with cell phone calls and letters in the mail. It has been extememly horrible and expensive for me to rectify this.
    I have been extemely enlightened on the horrible business ethic used by these types of companies. Everyone I called said it is just a bad experience and to “wait it out” and it will pass. Forgive me, but why the heck should I have to wait for you to remove all “leads” your company sent. They blame it on the computer systems not set up to reclaim or return leads. I know have several 50+ agents pulling my credit. And, no, it is NOT all soft pulls.
    For me to stop the pulls I have to spend $10 on each of the 3 major credit bureaus to have a password put on the accounts. This will require the company pulling credit to obtain the password from me first. What a hassel. And this is because, they have no “safety net” is in place with these agent databased referral services. My situation is not an isolated event. Even the customer service reps for these companies say it happens quite frequently. Sad, sad, sad business practice. Again, the “good consumer” who pays bills on time, doesnt live beyond their means and practices good financial morals, gets hurt in, the form of credit worthiness. Shame on you for not protecting the comsumers “you” represent.

  4. erleyedit says:

    whooo…boy! now I wish I hadn’t filled out the quote request.

    this is the hook that got me: “how to compare auto insurance rates online”

    hmmm… I thought it was going to pull numbers and post quotes so I could compare, instead I got a note saying I was “matched” with insurance providers who would be contacting me.

    now I REALLY wish I hadn’t filled out the forms, and there is no way to cancel….

    • UnsureHowToProceed says:

      After reading a few things online, now I’m more confused than before. I do know I want to compare rates b/c mine (in NJ) has gone WAY up in the past 2 renewals. But I do not want to be “matched” or get calls and mail. I just want to see the information for myself and decide. I also don’t want them staying on my credit report as multiple soft pulls, much less hard pulls.
      Any ideas out there?

  5. Michael says:

    I have been driving for 34 years with 1 small accident (I caused) about 25 years ago. Nothing my fault since then. Now, I consider myself a VERY SAFE driver.
    Good paying jobs are hard to find. Companies are cutting jobs right and left. This is the true reason for bad credit. I do not believe people stop paying bills are doing it on purpose. I am unemployed; food comes first, bills second. The little money I scrape up pays for food. My credit score is hosed and I am now paying MORE for car insurance.

    I still have the SAME Insurance company since I started driving, yes 34 years. If anybody should know I am a safe driver it’s them. What I learned, they chance your policy number often so they have the “I did not know excuse”. My insurance company now has the money to sponsor NASCAR, have enough money to be a home mortgage lender and a credit card lender. Something is very ROTTEN here.

    I would LOVE to know. Who started this? How did the insurance companies get my SSN in the first place? Your SSN was sacred, not to be disclosed for fear of identity theft. How did the insurance companies get away with checking it illegally? I know that politicians are involved, they have to be. I just wish I knew which ones and which parties. I searched the internet and found no answers. The insurance lobbyists donate MEGA money to political campaigns. But we are still the VOTERS.

    Does anybody know which politicians?

    Thanks,
    Michael

    • Damn Politicians! says:

      You are soooo rite. My blood pressure is through the roof now after reading everyone’s experiences. I’m afraid to to even shop for insurance now.

  6. jms says:

    Not true- Today I get a hard pull dropping my credit score by 35 points from researching an insurance quote bt elephant.com. Tomorrow it’s direct contact to Equifax and ELEPHANT as well as my local law enforcement agencies- any way to screw us all is in effect.

  7. Y'allAreSomeInsuranceHaters says:

    Wow……you guys are some haters. Insurance in my state is definately a soft hit. And you social is not required (by most companies) to get one. And there are websites you go to to register your vehicle or renew your license or who knows what else that takes your info (and in the tiny print tells you they are selling your info to partners) and that is one way a lead is sold. the companies selling the leads present them to insurance agents who beleive the leads are ligit. Technology and shopping on line for insurance are not quite together yet. Never will be. Because in my state, and I assume most others, YOU HAVE TO HAVE A LICENSE TO QUOTE INSURANCE, therefore a consumer would never be able to “shop” on line. You need to call an insurance agent and let them shop for you. There are agents called “independent insurance agents” or brokers, who actually have more than one insurance company to give you prices from.
    Soft Hits. Not Hard. I don’t know about elephant. I qot a quote from them this week and it better not show as a hard hit. Their rates were higher than anyone else anyway.
    Insurance companies can pull a soft hit without your social security number, although some require that you give your social before they will give you a quote.
    Insurance Haters will never be happy. No matter what. So just find an agent that is pleasant to speak with and answers the phone when you call. Agents do not charge more because they are a broker, they are paid commission for their work.
    Maybe one day technology and the insurance industry will be on the same page, but right now it is just not possible to “shop” several different companies without involving an insurance agent.

  8. Steve says:

    I have just spent the last 3 weeks trying to work out why i cannot renew my mortgage. Went to a financial advisor a who checked my credit report and it turns out that I cannot get a mortgage because the insurance companies have done over 20 credit checks on me in the last 5 months. It took them a while to figure this out. My credit report ended up getting pulled apart by multiple different financial advisors because they couldn’t believe it, but every time the only reason anyone could find was because of the insurance credit checks.

  9. Joe says:

    I had received online quotes from esurance, geico, and usaa recently. I visited the site Credit Karma recently and noticed 3 hard inquiries had been added to my report. coincidence?

    • Rob Berger says:

      Joe, it’s no coincidence, I’m afraid. The real question is how did it affect your credit score?

  10. Ernie says:

    Once you get your quotes, you can conduct a quick search of the multiple companies
    underwriting the policies and better determine which one not only offers a good value
    but actually deserves your business. Upon request, a driver must
    show this proof to a police officer. Before we discuss what happens if you only have liability insurance and you get into a crash, you should find
    out what the required liability insurance limits are in
    your state and what they mean.

  11. KP says:

    I would suggest doing a ‘credit freeze’ to your credit reports. This way, if anyone attempts to pull without your knowledge, they will not be able. In addition, if you are concern whether it is a ‘hard’ or ‘soft’ pull, contact the credit bureaus… equifax, experian or transunion for verification.

  12. Patricia says:

    Feb 2014 I had a credit score of 613 when I applied for a loan in July because my car broke down my credit score was a 565 the only thing I did was shopped around for car insurance

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