Car insurance credit checks

Wondering if you need a credit check for car insurance? Our car insurance credit check guide tells you all you need to know about credit checks and how they might affect your premium.

Written by

Julie Daniels

Motor insurance expert

Last Updated

29 JANUARY 2025

4 min read

Do car insurance companies check your credit score?

Car insurance providers will carry out a soft credit search when you compare providers to make sure that the details you’ve given them are correct. Only you can see this on you credit history and it won’t affect your credit score.

But if you choose to pay for your insurance monthly, rather than annually, your insurance provider will also do a full credit check. That’s because you’re setting up a credit agreement with your car insurance provider, so it’ll want to make sure you’ll be responsible when paying back the money.

Do car insurance quotes affect credit score?

As mentioned above, insurers will likely do a soft search on you but this alone has no impact on your credit score or your creditworthiness. But the hard search carried out if you choose to pay for your car insurance monthly will show up on your credit report and other lenders can see it.

That in itself isn’t any cause for alarm, but lots of hard searches in a short space can negatively impact your credit record as lenders may assume you’re desperate for credit because of a financial problem (eg, if you also apply for credit cards or loans at a similar time). But the good news is that anything negative should only be temporary.

So it is better to pay for insurance annually or monthly?

It’s always better to pay for your car insurance in one lump sum if you can afford to. Otherwise, you’ll have to pay interest on the monthly instalments and it will cost you more overall. That said, we know not everyone can afford to do so.

Will missed or cancelled car insurance payments affect my credit?

Missing a monthly car insurance payment could have a negative effect on your credit score. And missed payments – whether missed intentionally or not – can stay on your credit report for up to six years.

If you’re worried about making your next payment, get in touch with your insurance provider right away to discuss your options as you may be able to come to an arrangement.

If you decide to cancel your car insurance, make sure you let your insurance provider know. And if you pay monthly, you’ll need to tell it you’re cancelling your direct debit. If you don’t, it will look like you’ve missed payments, which could damage your credit score.

Can my credit score affect my car insurance?

Your credit score could impact the cost of your car insurance. If you have a poor credit history, you may pay more for car insurance. That’s because insurance providers consider you more likely to make a car insurance claim.

Bad credit could also be a sign that you’re not reliable in paying back your debts.

The price of your car insurance is based on a number of factors, including your:

Address
Job
Age
Driving history
Car make and model
No-claims discount
And LOTS more.

The good news is that poor credit doesn’t have to last forever and there are ways you could improve your credit score.

Check out our car insurance premium guide for more on what can affect the cost of your car insurance.

How do I check my credit report before buying car insurance?

You can check your credit score for free before you buy car insurance using one of the three main credit reference agencies: Experian, Equifax or TransUnion. In fact, if you intend to pay for your car insurance monthly, it’s a good idea to check your report to make sure there are no mistakes.

Read our guide to find out how to check your credit report for free.

Top tip

It’s a good idea to check your credit score often, even if you’re not looking to buy car insurance. Your credit report shows all your credit applications, so you’ll be able to see if someone fraudulently applies for credit in your name, for example.

What our expert says...

“One way you could avoid your car insurance payments negatively impacting your credit score is by choosing to pay your premiums annually – if you can afford to do so. Not only is it cheaper overall, but you could avoid a hard credit check on your file that could cause your credit score to dip.

“It also means you don’t have to worry about a missed monthly payment damaging your score.”

- Julie Daniels, Motor insurance expert

How to get car insurance with bad credit

Improving your credit score will help you to get car insurance if you have bad credit, but it can take time. In the meantime, if you have a low credit score, there are other steps you can take to get a cheaper quote, including:

Agree to pay a higher voluntary excess – just make sure you can afford to pay both the compulsory and voluntary excess if you make a claim.
Pay annually if you can – you’ll typically be charged interest if you pay in monthly instalments meaning it costs more overall.
Reduce your annual mileage – less time on the road means less risk for your insurance provider and perhaps cheaper insurance for you.
Compare cover levels – third-party insurance offers the least protection but it’s not always the cheapest option.
Carefully consider optional cover – extras such as courtesy car cover can bump up your premium.
Add an experienced named driver to your policy – just make sure to avoid ‘fronting’ by listing whoever drives most often as the main driver.
Choose a car in a lower insurance group – if you’re in the market for a new or used car, use our car insurance group checker to get an idea of how much it would cost to insure.
Consider a black box policy – if you opt for telematics car insurance, you could be rewarded with a discounted premium if you prove you’re a safe driver.
Shop around – comparing car insurance quotes could help you find more affordable cover.

Frequently asked questions

Why am I being refused car insurance for bad credit?

Some insurance providers may refuse your application if you have a bad credit score because they consider you too much of a risk.

It’s not always clear why an insurance provider may refuse to cover you. But there are many insurance providers out there, so by shopping around you should be able to find cover that works for you.

Can I still get car insurance if my credit score is low?

Yes, you can get car insurance with bad credit, but you might find your choice is more limited and it could affect the prices you’re quoted. If you want to pay monthly, some providers may reject your application if your credit history leads them to think you won’t pay.

Does paying monthly for car insurance affect my credit score?

If you pay your car insurance, plus interest, on time every month, it could improve your credit score. Your monthly car insurance payments show up on your credit report, so they’re a way to demonstrate that you’re a reliable borrower who pays their debts.

Any missed or late payments will lower your credit score – and your insurance provider could even cancel your policy.

Setting up a direct debit is the best way to make sure you never miss a car insurance payment.

Will I need a credit check if I pay annually?

No, there’s no need for a hard credit check if you pay upfront for your car insurance. Insurance providers run a soft credit check when you apply for insurance to check your identity and where you live, and to get basic details about your credit score. But this soft search won’t be visible to other lenders and it won’t affect your score.

Do I need a credit check for short-term car insurance?

You pay upfront for temporary car insurance, so there’s no need for a hard credit check. There may be a soft search of your credit history, though, to check your identity and residence.

Are named drivers on my policy credit checked?

No, named drivers you add to your policy won’t need a credit check.

Can I refuse to have my credit checked?

Yes, you can refuse a credit check, but it will probably mean your insurance application is rejected. Insurance providers should let you know before they run a credit check.

The only way to avoid a hard credit check is to pay upfront for a year of car insurance.