Will my credit rating change my insurance rates?

I was recently asked this question by one of our Thams Agency clients, “Will my credit rating change my insurance rates?” I want to share the answer here for our readers.

There are a lot of things that go into homeowners and auto insurance rates, one of them being credit. Some people have absolutely no idea that it’s used in the rate at all.

Is there a negative impact on your credit score?

Insurance companies don’t pull your credit like a mortgage company does. There is no negative impact on your score as a result of an insurance company looking at it.

When I say “pull” what I mean is that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).

When does credit rating play a role in insurance rates?

It’s important to understand that insurance companies don’t continuously check or monitor your credit. Usually, they only check it when you first get a quote and/or sign up with them in the very beginning.

This means that if your score increases (or decreases) your insurance company does not automatically know about it.

So, to answer the overall question of whether or not your increased rating will lower your rates, the answer is not automatically.

How does it work?

What has to be done on our side as the agent is to contact the carrier and ask them to do what’s commonly referred to as a “re-score”. This is when the insurance company can re-run the person’s credit (soft inquiry) to see if there is any positive bearing on the rate.

This isn’t something that the insurance company is going to let the agency do every single year, so it’s not worth asking unless there has been a significant change in your credit score. Only you as the customer would know if that was the case.

If you’d like to get a better handle on your rating, it could be helpful to set up credit monitoring. We hope this was helpful! As always, email us at team@thamsagency.com with any questions.