Will your credit score impact how much you pay for your car insurance? We discuss everything from whether you credit score is checked by insurance companies how paying monthly could help.
Key takeaways
- Insurers can check your credit score as part of assessing risk: a lower score may mean a higher premium
- Getting a car insurance quote only leaves a soft search on your credit file. It does not affect your credit score
- This applies whether you get a quote through Confused.com or any other comparison site. The soft-search principle is industry-wide
- Soft search footprints from quotes are automatically removed from your credit file after 12–24 months
- Paying monthly is different. Insurers run a hard credit check when setting up a monthly payment agreement, which does leave a mark on your file
Do car insurance companies check your credit score?
Yes, many car insurance providers in the UK check your credit score. But don’t worry - it’s usually a soft search, which doesn’t impact your credit rating.
Insurers use this information to help them calculate how much you pay for your insurance. And to assess your reliability in making monthly payments. If your credit score’s on the lower side, they may see you as a higher risk. This could lead to higher premiums or even limited payment options.
If I get a car insurance quote, will that affect my credit score?
Getting a car insurance quote from most providers won't affect your credit score, and neither will searching for car insurance more generally. That's because insurance quotes only trigger a soft search. It's visible to you, but not to lenders, so whether you're getting one quote or comparing a handful, your credit rating stays untouched.
This applies whether you get a quote through Confused.com or any other comparison site. The soft-search mechanism works the same way industry-wide, no matter which provider you use.
Quote-related soft searches are automatically removed from your credit file after 12 to 24 months. This soft footprint also helps you spot suspicious activity. If someone runs a quote using your details without your permission, you'll be able to see it on your file.
However, if you choose to pay monthly, your insurer might carry out a hard credit check instead. This can temporarily lower your credit score, as it's visible to other lenders.
Will my credit score affect my car insurance?
Your credit score can affect the price you pay for car insurance. Here’s how:
- Monthly payments: If you opt to spread the cost, a lower credit score might mean higher interest rates.
- Policy approval: Some insurers may decline your car insurance application if your score is very low.
- How much you pay: Insurers may see customers with low credit scores as a financial risk, leading to higher premiums.
It might be worth checking out our guide on how to get cheaper car insurance for more information.
How do I find out what my credit score is?
You can check what your credit score is for free with services like:
Regular checks can help you spot issues and improve your score over time. A higher score could mean better car insurance deals in the future.
Will paying monthly for my car insurance affect my credit score?
Yes, paying monthly for car insurance can affect your credit score. Here’s why:
- On-time payments: Paying on time can help build your credit history.
- Missed payments: Late or missed payments may negatively impact your score.
Monthly payments often involve a credit agreement, which means your insurer might conduct a credit check before approval. While this can make car insurance more affordable in the short term, spreading the cost usually includes interest charges, making it more expensive overall.
Some insurers advertise "no deposit car insurance", but this doesn’t mean you avoid upfront payments. Instead, it refers to spreading the cost over monthly instalments, which still requires an initial payment.
Paying annually avoids interest and credit checks entirely, but if monthly payments suit your budget better, make sure to stay on top of them.
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