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Insurance quotes: Does shopping for insurance affect your credit score?

May 24, 2012 by Steven M. Gursten

Today we’re featuring a guest blog post by Russell D. Longcore. Russell is a claims consultant, an insurance adjuster and author of Insurance Claims Secrets Revealed.” His popular book outlines strategies for policyholders or claimants to maximize claim settlements, so they’re not taken advantage of by insurance companies. Russell has long experience and a deep wisdom about insurance, and how many insurance companies take advantage of people. One of the worst ways that this occurs is through your credit score – something that is now legal for insurance companies in Michigan to use to discriminate against people, thanks to the Michigan Supreme Court.

Here’s what Russell Longcore wrote about insurance quotes and credit scores:

Insurance quotes and insurance company underwriting have recently added a new factor for evaluating new customers. Now, insurers will check your credit scores. They have determined through statistical testing that people with good credit scores are better risks, and that undesirable credit scores are not good potential customers. Insurance companies and agents that see a person with a high credit score will consider you a low-risk client.

There are many consumers who worry that requesting new insurance quotes could have a negative affect on their credit scores. When agents or insurers pull up your credit report, it creates an “inquiry” on your credit history. Inquiries can sometimes lower your credit score by a few points.
So, does shopping for insurance quotes lower your credit score?

The answer is “NO.”

There are two types of credit inquiries:

“Hard pulls” – this refers to credit inquiries for acquiring credit as from a lender, credit card company or a merchant credit card.

“Soft pulls” – this refers to inquiries made that review your credit score. This is the kind of “pull” that an agent or insurance company will do during the quote process. Soft pulls are not noted on your credit report except listing the name of the entity that made the request. But the soft pull does not lower your credit score.

So, you may be confident that shopping for insurance quotes will not lower your credit score. And it is very important to know that a good or high credit score can lower your insurance rates when you shop for insurance quotes.

Hot tip: The trade group Independent Insurance Agents and Brokers Association (IIABA) finds that 85% of new insurance buyers will use the Internet for rate quotes and research before making a purchase. Start shopping online for insurance and allow excellent local insurance agents to contact you with the most competitive quotes for your insurance needs.

You could save hundreds of dollars per year through the insurance quote process. Many times, the new agent you choose will handle cancellation of your old policies and take care of all the paperwork. Shopping on the Internet for insurance quotes is easy, simple and FREE!! It does not cost you one cent to get an insurance quote. In a matter of minutes after you submit your request, agents will begin contacting you to complete your quotes. You could get better coverage for less money…it happens all the time.

Don’t waste time, and don’t spend more for coverage than you have to!

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One Reply to “Insurance quotes: Does shopping for insurance affect your credit score?”

  1. Great post Steve:

    People are hesitant about having their credit scores and you are correct a “Soft Pull” will not lower your score!

    The internet is a great place to start but it is imperative that people talk to an agent in order to secure the coverage that is right for them. If they click the wrong button online and end up with Excess PIP coverage when they need Primary or choose minimum limits for un/underinsured motorists liability the few dollars they save in premium could come back to bite them in the event they have a loss.

    You describe using credit scoring as “a way insurance companies discriminate against people.” I like Mr. Longcores view that insurance companies “have determined through statistical testing that people with good credit scores are better risks, and that undesirable credit scores are not good potential customers. Insurance companies and agents that see a person with a high credit score will consider you a low-risk client.”

    Credit Scoring is no different than any different rating tool that they use to predict risk. Some others are using a persons age, driving record, claims history and physical location. All of these have been proven to be predictors of loss.

    Jason Verlinde

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