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Car insurance and credit checks

Car insurance and credit checks

Wondering if you need a credit check for car insurance? Our car insurance credit check guide will tell you everything you need to know about how credit scores might affect your premium.

Daniel Hutson
From the Motor team
minute read
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Posted 4 NOVEMBER 2019

Do car insurance providers check credit?

Car insurance providers will look at your credit score when you compare quotes to check your details. They will also do a credit check before you actually buy your policy, if you want to pay monthly rather than annually. 

Will getting a price comparison quote from an insurance provider affect my credit score?

No. When you compare quotes, insurance providers will do a ‘soft search’ simply to check that the details you’ve given them are accurate. This won’t affect your credit score and can only be seen by you.

However, if you decide to pay for your car insurance monthly, the provider will carry out a ‘hard search’. This will show up on your record and can be seen by other lenders.

When you pay for your car insurance monthly, you’re effectively getting credit from the car insurance provider. So they’ll want to assess whether you’ll be responsible about paying the money back.

Will my credit history affect the cost of my car insurance?

The cost of your car insurance is based on a number of things including:

  • your address
  • your job
  • your age
  • how long you’ve been driving and your driving history
  • the make and model of your vehicle
  • your annual mileage
  • any named drivers
  • the amount of voluntary excess you want to pay
  • any no claims discount you may have

But if you have a poor credit history, you may pay more for a monthly premium. That’s because, statistically, people with low credit ratings are more likely to make car insurance claims.

Paying monthly is also usually more expensive than paying for your car insurance in one go, as providers typically charge interest on the monthly instalments.

If you want to pay monthly, it may be worth checking your credit report to make sure it’s correct. You can do this for free via the credit reference agencies. See our guide to free credit checks.

For more information on the factors that affect the cost of your car insurance, read our car insurance premium guide.

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