Will insurance quotes from a comparison site affect my credit score?

If you've used a comparison site to search for cheap insurance you may have noticed it's left a mark on your credit file. Who can see this? And can it scupper your chances of getting credit in future? Here's the lowdown...

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Insurers check your credit file to confirm your identify

how insurers get your details

When you ask an insurer for a quote – whether directly or through a comparison site – you'll need to enter information such as your address, job, marital status and past claims history.

The insurer then uses these details to determine the quote it'll give you – because all prices are dependent on an individual's personal circumstances. For example, a person living in a high-crime area who has claimed in the past will pay more for home or car insurance than someone in a low-risk area with no claims history.

It then checks your credit file to make sure the information you've given is accurate and you haven't been telling porkies. Even though these are just 'routine checks' they still need to be logged and that is why they appear on your file. If you spot one it should be called something like 'insurance quotation' or 'ID check' with the name of the insurer that did the search.

These checks are 'soft' searches, so lenders don't see them

Don't panic, this routine check is what's called a 'soft' search and leaves no permanent mark. This means it can't be seen by anyone other than you and the credit reference agency providing your credit score, and will disappear after 12 months. So it will have no impact whatsoever on your chances of getting credit in future.

This is different to the 'hard' searches used when applying for credit – such as a credit card, loan or mortgage – as the lender uses your credit file as part of its decision on whether or not it'll accept you. These are visible to other lenders and could affect you if you apply for credit in future.

It only leaves a mark if you take out a policy and opt to pay monthly

While the quote won't leave a mark, if you go on to take out an insurance and choose to pay in monthly instalments (as opposed to one lump sum upfront) this involves setting up a credit agreement. Paying monthly is effectively a loan where you pay interest on top and therefore it's seen as you've applied for credit. And as when applying for any type of credit, you'll be credit-checked.

You should be told before the insurer does a hard search (it might not use those words but is likely to say it will credit-check you) and if you're not happy you're free to pay for the whole year's insurance premiums in one lump sum (this is usually cheaper anyway – see our Insurance Guides for more cost-cutting info).

All applications have a slight short-term negative impact on your creditworthiness, but it's only really a concern if you've a key credit application coming up, such as a mortgage

Every time you apply for credit it adds a footprint to your file for a year. Too many, especially in a short space of time, can trigger rejections as it makes it look like you're desperate for credit. Therefore, space out applications if you can and don't do them frivolously. For full details see How to Boost Your Credit Score.

Keep on top of your car insurance

Mobile phone showing the MSE App.

Wanna know when YOUR cheapest time to get car insurance is? The MSE App has a new tool called Bill Buster – give us a few details about your car insurance policy and we'll track it, then alert you when it's ending so you know when to start getting quotes to save.

Try it in the MSE App – available in Apple's App Store or Google's Play Store

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