Will my credit rating change my insurance rates?

I’ve received several questions recently from clients who are concerned about the role of credit in determining homeowners and auto insurance rates. Some are unaware that credit is even a factor in their insurance premiums. I wanted to take a moment to address this, as it's a common concern.

First and foremost, it’s important to understand that insurance companies have been using credit as one of the factors in determining rates for decades. While it can be frustrating for some, this practice is unlikely to change anytime soon.

It’s also worth noting that insurance companies don’t pull your credit in the same way a mortgage lender or credit card issuer would. When an insurer checks your credit, they perform what’s called a soft inquiry—this does not impact your credit score, unlike a hard inquiry which could potentially lower your score.

Now, when does credit come into play for insurance rates? Generally, insurance companies will check your credit only when you first request a quote or sign up for a policy. They do not continuously monitor or update your credit information after that. So, if your credit score changes after your policy is issued, the insurer won’t automatically adjust your rates based on that new score.

In response to a recent question from a customer about whether an improved credit score would lead to lower rates, the answer is no, not automatically. As your agent, we can reach out to the insurance company and request a "re-score," which allows them to recheck your credit (via a soft inquiry) and potentially adjust your rate accordingly. However, this isn't something that can be done every year, and it’s typically only worth pursuing if your credit score has significantly improved.

If you're interested in staying on top of your credit and managing changes, setting up credit monitoring services can be a great tool to keep track of any fluctuations in your score.

We hope this clears up any confusion! If you have further questions or need more information, feel free to leave a comment below. We’re here to help!