Is it bad for your credit to change insurance companies for your home and auto?

It is not bad for your credit to change insurance companies for your home and auto. Looking for new insurance doesn't hurt your credit, but your credit score does play a large role in your insurance rate calculations. You can request as many quotes as you need to find the best insurance company for you, and your credit score will remain unchanged.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati.com. ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Aug 26, 2021

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Can't-Miss Facts

  • Applying for insurance quotes does not hurt your credit score
  • Missing payments on your credit cards can damage your credit score
  • Your credit score influences what you pay for home and auto insurance

If you’re worried about hurting your credit score but need more affordable home insurance, is it bad for your credit to change insurance companies for your home and auto?

It’s wise to be concerned about the state of your credit, but do insurance quotes affect your credit score? Many people think that shopping for better auto insurance rates or home insurance will hurt their credit, but, thankfully, that is a myth.

Your credit score will remain unscathed no matter how often you request quotes while shopping online. While it is true that insurance companies conduct a soft pull on your credit to learn what your score is, this type of inquiry does not have any affect on your credit score.

When insurance companies conduct such an inquiry, you’ll be be able to view these inquiries when reviewing your personal credit report, but lenders cannot see them and your credit scored remains unaffected.

Is it bad for your credit to change insurance companies for your home and auto? No, and you can get as many quotes as you like without hurting your credit. Enter your ZIP code today to receive free insurance quotes today.

Why do insurance companies check scores?

If you need better auto insurance rates, is it bad for your credit to change insurance companies for your home and auto? It isn’t bad for your credit, but it is homeowners insurance 101 to make sure that you have a good credit score when shopping for insurance.

Your credit score is very important to insurance companies; it’s used as a guide to gauge what level of risk you’ll bring to the insurance company. Insurance companies have found that individuals with lower credit scores have a higher chance of filing a claim than those with good credit.

So, if you’re anxious to get some home insurance quotes, is it bad for your credit to change insurance companies for your home and auto? No, but your current credit score could influence what type of offers you receive.

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What effect does a bad credit score have on insurance rates?

Unfortunately, the lower your credit score, the higher your rates could rise. On the other hand, if you have a high credit score, your rates could actually drop.

Working to improve your credit can bring a score of benefits, including better rates, but of course, your insurance company doesn’t look at your credit score alone to establish your level of risk.

This list highlights some of the key factors that insurance companies take into account when calculating your rates for home and auto insurance:

  • Your age
  • Your property value
  • The age of your home
  • The size of your home
  • The make and model of your vehicle
  • Your location
  • Your driving history
  • Your education level

Your insurance company tries to have a complete picture of you as an individual so it can build a quote that it is tailored just for you, but your credit score does play a large role in the calculation of your quote.

What affects a person’s credit score?

Does auto insurance affect your credit score? It certainly can, especially if you use your credit card to pay for your auto insurance. Quite a few things can affect your credit score. Take a look at this list below so you can learn exactly what can modify your credit score:

  • Your payment history
  • How much you owe
  • Your credit history length
  • Your credit mix
  • New credit

Your payment history has the most influence upon your credit score. Just one missed payment can negatively impact your score. This is because lenders want to be assured that you can and will pay back your debt on time.

How much you owe, also known as your credit utilization ratio, is another important factor in your credit scores. Your credit utilization ratio examines much of your available credit you’re using; if you are utilizing more than 30% of your available credit, lenders view that as a bad sign.

The length of time that you’ve held credit also plays a role in determining your credit score. The length of your credit history is found by looking at your oldest and newest credit accounts and finding the average age of these accounts.

Typically, if you have a long credit history, you’ll have a higher credit score.

Your credit score isn’t always influenced by credit cards alone. If you have a mortgage, students loans, or other credit products those contribute to make up your credit mix. Individuals who have a diverse portfolio of credit accounts tend to have higher credit scores.

Applying for new credit accounts too rapidly can be seen as an increased risk by lenders and can damage your credit score.

How can a credit score be improved?

If you are bemoaning the state of your credit score but want to find a new home insurance company, is it bad for your credit to change insurance companies for your home and auto?

Your credit won’t suffer when looking for a new insurance company, but you should try to improve your credit score so you can obtain better rates.

You can start by building your credit file, which means opening accounts that will be reported to TransUnion, Equifax or Experian, the major credit bureaus. Opening such accounts, with perhaps a good rewards credit card, can help you start to establish a good history as a dependable borrower.

You could even register for a service like Experian Boost. This adds payments that typically wouldn’t be seen on a credit report, like utility, cellphone, and streaming service payments, so they can boost your credit score.

Bear in mind that you should limit how often you’re submitting credit applications. Unlike an insurance quote, applying for a credit card results in a hard inquiry of your credit. This can hurt your scores, especially if more and more such inquiries start to pile up.

One of the best rules of thumb to keep in mind when trying to improve your credit is to never miss payments. Many people enroll in auto deposits so they don’t forget to make their payments, but you should use whatever method works best for you to start on top of your monthly charges.

Are there insurance companies that do not use credit scores to calculate rates?

You can look for new insurance companies even if you bad credit currently, but you will be pressed to find an insurance company that doesn’t use pull your credit.

Most, if not all, insurance companies use a credit-based insurance scoring system to predict the likelihood of you making a claim and find the appropriate rates for you.

When shopping for insurance, price is important but you should also consider the coverage you’re getting. Don’t sacrifice good coverage for a cheaper rate; that could save you some money immediately, but in the long run it could cost you if you don’t have enough protection.

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How Your Credit is Affected by Your Insurance: The Bottom Line

If you’re ready to start looking for better home and auto insurance but had been worried about receiving quotes due to a fear that it would hurt your credit, you can rest easy.

Insurance companies, while they’ll conduct a soft pull of your credit, can send you as many quotes as you like, and your credit score will remain unscathed. Insurance companies do use your credit score to calculate your rates, though, so you should work to maintain a good credit score.

Is it bad for your credit to change insurance companies for your home and auto? It isn’t, and that means that you can enter your ZIP code today to receive free insurance quotes from companies near you.

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