Published On: December 15, 2020/2.1 min read/Categories: Insurance/

I was recently asked this question by one of our Redding Insurance clients, and thought I would 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. I’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting.

Some people have absolutely no idea that it’s used in the rate at all.

At the end of the day, there’s not much we can do about it though. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.

By the way, insurance companies don’t pull your credit like a mortgage company or credit card company does. There is no negative impact on your credit 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 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 credit score increases (or decreases) your insurance company does not automatically know about it.

So, to my customers question of whether or not his increased credit score will lower his rates, the answer is not automatically.

What has to be done on our side as the agent is contact the carrier the insurance 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 even asking unless there has been a significant change in your credit score, and only you as the customer would know if that was the case.

If you’d like to get a better handle on your credit rating, it could be helpful to setup credit monitoring. We hope this was helpful! As always, leave us comment below if you have any questions.

Share This!

About the Author: LeRoy Redding

LeRoy Redding has been an insurance agent for over 30 years and started his business as Redding Insurance in 1991 with a home office in Bellevue, Washington. He cares a lot about serving others and always strives to bring special care and concern to every client. When he gets the time, LeRoy likes to dive into some Sudoku and crossword puzzles. He is an avid sports fan of his favorite teams: the hometown Boise State Broncos, the University of Washington Huskies, and the Penn State Nittany Lions. He and his wife Carol have been married for over 40 years. They enjoy going on walks, working on jigsaw puzzles, and spending as much time as they can with their three grown kids and seven grandchildren.