Car insurance and credit checks: What you need to know
Your credit score can affect your car insurance quotes – and your car insurance payments can affect your credit score. Here’s how.
Key takeaways
Poor credit can lead to higher car insurance premiums and limited cover options
Soft credit checks are done when getting an insurance quote, this doesn’t affect your credit score
Hard credit checks are done if you choose to pay monthly, which may temporarily lower your credit score
Do car insurance companies check your credit?
Yes, when giving you a quote for your car insurance, providers will run a soft check (or soft search) on your credit report so they can confirm your identity.
It’s the same whether you’re seeking a quote directly from a provider or via MoneySuperMarket.
However, if you choose to pay your insurance in monthly instalments rather than one annual payment you’ll be entering into a credit agreement with the car insurance provider so they will perform a hard check (or hard search) on your credit file to gather more information and see if you are reliable with payments.
Does my credit score affect my car insurance premiums?
Yes, your credit history can affect the cost of your car insurance. If you have a poor credit history, some insurers consider you more likely to make insurance claims or to miss payments so you might face higher monthly premiums than someone with an excellent credit rating.
Of course, this can vary by provider. That’s why it’s a good idea to compare car insurance quotes from multiple providers so you can see a wider range of quotes available to you and choose the best one.
A number of other factors can affect your premiums too, such as:
Your age
Your postcode
The make and model of your car
Where you park your car at home
Your job title
Whether you have previously made claims
Will getting an insurance quote affect my credit score?
No. To get you your quotes, insurers only run soft checks, which have no effect on your credit score.
The check will show up on your file, usually as something like “ID check” with the provider named, but it will only be visible to you and won’t change anything.
However, if you decide to pay for your insurance in monthly instalments, the insurer will run a hard check, which will be visible to anyone who views your credit report.
Your rating may drop slightly after the hard check is run, though this should only be temporary.
Keep in mind that if you do lots of car insurance applications, which require hard checks, in a short period of time it could signal to lenders you’re having money problems, and damage your credit score.
Temporary car insurance, meanwhile, has no effect on your credit score as you pay upfront, and named drivers don’t need a credit check.
Can you get car insurance with bad credit?
Yes, you can still get car insurance if you have poor credit history but you might experience:
Higher car insurance premiums
Limited options in terms of cover and excess
Did you know…
A survey by the Financial Conduct Authority (FCA) in January 2024 found 5.5 million people in the UK had missed bill payments or borrowing repayments in the previous six months.
Can you be refused car insurance if you have bad credit?
It’s possible as some insurers may consider drivers with low credit scores too much of a risk. But getting rejected by the entire market is very unlikely. You should still be able to get car insurance from at least a few providers, regardless of your credit rating.
However, it may mean that your options for cover are more limited. Your premiums are also likely to be higher.
Compare car insurance quotes to see what’s available for you.
What’s the best way to get car insurance with poor credit?
A poor credit history shouldn’t stop you from getting car insurance. But there are a few things you can do to reduce your premium:
Compare your options and shop around: Use our comparison service to find the best quotes for you
Choose plans with a higher excess: This will make your premiums cheaper overall
Lower your cover: You’re more likely to get accepted for car insurance with lower levels of cover
Pay annually rather than monthly: This usually means a lower overall cost, plus the provider won’t run a hard credit check on you
Add a named driver: If someone close to you, such as partner or parent, is an experienced driver with better credit, add them as a named driver
Cancel your old policy properly: Not doing so can mean missed payments, which can lead to a worse credit score
Improve your credit score: In the long term, you can also work to improve your credit score, and sign up to MoneySuperMarket’s Credit Score to keep on top of it
