Does Changing Your Auto Insurance Hit Your Credit Score?

Does Changing Auto Insurance Affect Your Credit?

Changing your auto insurance can trigger a credit check that temporarily impacts your credit score, but the effect depends on whether the check is hard or soft and the laws of your state. A hard inquiry from a new insurer may lower your score by a few points for up to a year, while a soft inquiry has no impact at all.

Hard vs. Soft Credit Checks

When you apply for new coverage, the insurer may pull your credit. A hard inquiry occurs when the insurer needs to make a final underwriting decision, and this is what can ding your credit. A soft inquiry is used for pre-qualification or rate comparison and leaves no trace on your credit report that other lenders can see.

Why Insurers Check Credit in the First Place

In most states, insurers use credit-based insurance scores to help set premiums. They argue that credit history correlates with claim likelihood, so a lower score can mean higher rates. Changing policies forces a reassessment, which is why a new credit check often follows a quote.

State Laws That Limit or Ban Credit Checks

Not all states allow this practice. California, Hawaii, Massachusetts, Michigan, and several others restrict or prohibit the use of credit for auto insurance pricing. In these states, changing your policy will not hit your credit through an insurance check, regardless of the insurer.

How to Minimize the Impact

• Shop for quotes within a short window (typically 14 to 45 days) so multiple inquiries can be treated as one.
• Ask the insurer upfront whether they will run a hard or soft check.
• Check if your state restricts credit-based insurance scoring.

Once the new policy is active, the hard inquiry remains on your report but fades in influence over time. The coverage change itself does not appear on your credit report, only the associated inquiry does.