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.
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. Why? Because they only conduct a soft search. These checks are visible to you but not to lenders.
However, if you choose to pay monthly, your insurer might carry out a hard credit check. 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.
them once you’ve passed your test. They let other drivers know you’re new on the road and still building confidence after passing your test.
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