Does getting a car insurance quote affect your credit rating?

In these difficult economic times, it makes sense for people to ask more questions before committing to anything that = handing over their hard-earned cash. A great example is something our digital gurus picked up on, which is that more people are searching online to find out if getting a car insurance quote will affect their credit rating.

Exploring this makes sense, because your credit rating affects a lot of important areas of your life, like whether a bank will approve your home loan application. As far as the bank is concerned, your credit score tells them how much of a risk you are. If you have a good score, you’re more likely to get the loan and buy your dream home.

But we’re getting sidetracked. You want to find out if getting a car insurance quote will affect your credit.

What’s the answer?

The simple answer is no. Getting a car insurance quote won’t affect your credit rating at all. However, it must be said that insurance companies use a range of factors to assess your risk and determine if they’ll give you a policy, as well as the premium that you’ll pay.

These factors include things like the age, make and model of your car, as well as your age, driving history and… Your credit score.

Wait, how does your credit score affect your car insurance?

While getting an insurance quote won’t affect your credit score, your credit score could affect your car insurance in 3 main ways.

Firstly, your credit score is a pretty powerful indicator and even predictor of your financial behaviour. It tells an insurance company how likely it is that you’ll pay your bills (or not pay), giving them an idea of if you’ll be a reliable policyholder. If they think you won’t be able to meet your obligations, they may not offer you a policy.

Secondly, a low credit score could see you paying more for your car insurance. You see, your credit score is part of your risk profile and if you’re seen as someone who might not pay their premiums, then you’ll be regarded as a higher risk. People who are a higher risk to cover, usually pay higher premiums.

And thirdly, dum dum dummmmmmm… If you don’t pay your car insurance premiums, then you will have defaulted on your debt and this will cause your credit score to go down, which could put you in an even more difficult financial situation. That’s not how you want your story to go.

Here are some things that could negatively impact your credit score:

Missing monthly payments.
Being late on monthly payments.
Frequently applying for credit.
Your credit use continuously goes up.
Having a judgment against you.

Hey look, if you’re insured by the king and things are getting so tight that you can’t manage your premiums and are thinking of cancelling altogether, please get in touch with us. It’s super risky to cancel your insurance and we want the best for you. Always.

How do you know your credit score?

Thankfully, it’s easy to obtain your credit report. You just need to visit a website like transunion.co.za where you can download your credit score for free once a year. You can also visit other credit platforms where you can access your score for free, as often as you want, like this one here.

But what good is knowing your credit score if you don’t understand it? We can help you there, too!

Simply, a credit score is a 3-digit number that ranges from 0 to 999. The higher your score, the better your credit rating.

Here’s how to understand credit scores:

0 – 486 = Poor
487 – 526 = Unfavourable
527 – 582 = Below average
583 – 613 = Average
614 – 680 = Favourable
681 – 766 = Good
767 – 999 = Excellent

Right, so can you improve your score?

The great news is that you can absolutely improve your credit score. Yes, it’s possible! For instance, you can catch up on past-due accounts, pay down your revolving credit balances, avoid applying for new accounts and not miss payments.

Again, if you’re finding yourself in a pretty bad financial situation and the pressure is getting to you, then before you miss a payment or cancel your policy altogether, please get in touch with us.

Our goal is to provide affordable car insurance and help you avoid a nasty situation where you’re involved in an accident and don’t have us to shield you from those costs.

WhatsApp us on 0860 50 50 50 or click here so we can call you back. Together, we can work this out.