Credit scores. The mysterious system we use in the United States to gauge credit worthiness (here is the technical definition).
Most of us are loosely familiar with credit scores and the role they play in our financial lives. If you’ve ever applied for a credit card, loan, or even an apartment/house, you’re likely pretty familiar with the role credit plays. There are a number of cases when your credit score gets dinged by applying for a loan. It begs the question, “what about when I apply for car insurance? Does getting a car insurance quote hurt your credit score? Here we answer that question simply, and give you more than you bargained for with a little extra on some common credit terms.
The LoDown: Getting a car insurance quote does not hurt your credit score.
You heard right… Let the myth be discredited! If you pull your credit report, you may see a “soft inquiry” when you get an auto insurance quote. Soft inquiries are not related to a specific application for new credit, but are recorded on your credit report so you can see who has inquired about your credit history. But, it’s the hard inquiries, those resulting from a lender checking your credit before making a lending decision, that ultimately affect your score — not the soft ones like a car insurance quote.
With HiRoad, we designed our quote to work quickly, so you can see how HiRoad can work for you, and then get back to your day. It usually only takes a few minutes, and simply requires your name, address, and date of birth to get you a quote! You can then easily change coverage levels based on what makes the most sense for you.
HiRoad does use certain credit characteristics to make decisions in the insurance application process. Similar to any other car insurance, your HiRoad quote won’t hurt your credit score, but as we said, it may show up as a “soft inquiry” on your credit report.
Now, you know it won’t hurt you — but, you might also be wanting to clear up your understanding of these different terms relative to credit.
Credit report: Think of it like a report card. It’s a comprehensive record of your credit history and serves as a credit reference.
Credit score: Think of it like your GPA. Your credit score is calculated by “an algorithm that measures your creditworthiness based on the information in your report at one point in time.”
Hard inquiries: “Hard inquiries (also known as ‘hard pulls’) generally occur when a financial institution, such as a lender or credit card issuer, checks your credit history when making a lending decision. They commonly take place when you apply for a mortgage, loan or credit card, and you typically have to authorize them. A hard inquiry could lower your scores by a few points, or it may have a negligible effect on your scores.”
Soft inquiries: “Soft inquiries (also known as ‘soft pulls’) typically occur when a person or company checks your credit history as part of a background check or for other permissible purposes. This may occur, for example, when a credit card issuer checks your credit without your permission to see if you qualify for certain credit card offers. Your employer might also run a soft inquiry before hiring you.”
“Unlike hard inquiries, soft inquiries won’t affect your credit scores.” This is what a car insurance quote falls into.
In summary, a “hard inquiry” (or hard hit) usually involves actually asking for money, and requires your authorization, whereas a “soft inquiry” (or a soft hit) won’t impact your credit score.
Now that you know it won’t hurt your credit score – check out your free and fast HiRoad quote here.