Before you purchase your new car insurance policy, you’ll need to know whether car insurance quotes will affect your credit score. While some insurers do use credit score to determine premiums, others don’t. Some do use it to determine a risk category. In any case, you should ask the insurance company how they determine your risk category. Your credit score accounts for a third of your overall credit score. If you have a good credit score, you’re more likely to qualify for a lower rate.
In order to determine the risk associated with car insurance quotes, you must understand how credit inquiries work. Inquiries are essentially two different types, hard and soft. tunai4d Soft inquiries, which are not related to new applications for credit, will show up on your credit report as “soft inquiries.” Although these inquiry types don’t affect your credit score directly, they will reflect negatively on your report if you make a lot of hard inquiries on it.
While an insurance quote doesn’t affect your credit score, the method of premium payment can negatively impact your score. While paying your premium in a lump sum won’t impact your score, paying it in instalments is a credit agreement, which means the insurance company will conduct a credit check before accepting your application. This footprint can affect future applications for loans. This is why it is a good idea to apply for insurance only from two to three companies.