Your Credit Score And Insurance: Get Answers To The Questions You Have

If you are looking to get the best rate for your car insurance or home insurance, you may be doing research to find out what factors may affect the price you are quoted. There are many factors that can affect how much you will pay for insurance, including past claims and the value of your home or car. However, one of the things that may affect the insurance rate that you may not even realize is your credit report and credit score. Here are a few of the questions you may have about your credit score and insurance. 

Do Insurance Companies Look At Your Credit Score When Providing a Quote? 

Insurance companies may look at your credit score when providing a quote for car, homeowners, or renters insurance policies. It is illegal to use your credit information when setting a premium for life insurance policies. It is important to note though that some states, such as California and Massachusetts, are starting to outlaw the practice of using the information on a credit report when determining insurance premium amounts or when deciding whether you are qualified to obtain an insurance policy. 

Will Getting Multiple Insurance Quotes Affect Your Credit? 

Once you hear that information contained on your credit report may affect insurance policies, you may wonder if getting quotes from multiple companies will negatively affect your credit. Insurance companies use a soft pull method. As such, obtaining quotes for auto or homeowner's insurance from multiple companies will not affect your credit. 

Why Do Insurance Companies Check Your Credit Score and Report? 

Insurance companies check your credit report and score for multiple reasons. First off, insurance looks at your report to determine if you will pay your insurance premiums. If you are late on multiple payments, you may be at risk of defaulting on your insurance payments. Secondly, insurance companies use the information on your credit report to determine how likely you may be to file a claim. This allows an insurance company to determine how risky you may be if they provide you with any type of insurance policy. 

In most states, it is legal for insurance companies to use information reported on your credit report, including your credit score, when determining how much you will pay for home or auto insurance. As such, if you are preparing to look for insurance, one of the best things that you can do is work to get your credit score up, as this may help you to pay less for your insurance policy. 

For more information on insurance, contact a professional near you.