If a Soft Credit History Check Can't Hurt Your Credit Score

Many people know that sending applications to many different banks in the process of shopping around for a credit card, mortgage or other loan can hurt their credit score. While credit agencies do view multiple applications within a week or so to be part of a single shopping process, they tend to issue credit score cuts if they see the shopping process continue for longer. When a person makes persistent credit inquiries, they choose to see it as desperation for money. Repeated loan applications affect 10% of the final credit score that credit reference agencies arrive at.

Can shopping for car insurance hurt your credit score?

Many people find credit history check entries or footprints on their credit reports shortly after they search online for car insurance, just as they do after searches for credit cards or mortgages.

When you try a quote search through an online insurance quote comparison tool, it opens up the websites of multiple individual insurers, plugs in all the numbers that you've given it and waits for quotes. When these websites come up with their quotes, it uses screen scraper software to read the quotes shown on the screen on each individual website and presents it all to you. Using a comparison tool, then, has the same effect on your credit file that personally going to the websites of individual insurers does.

Many insurers perform a credit history check on each applicant prior to making a quote. They see a person with a good credit score as a responsible person overall who is a low risk of reckless driving. When a person's credit history check turns up a low credit score, though, they see an applicant who is probably as careless with his driving as he is with his money. Applicants with low credit scores get higher quotes. Since car insurance premiums tend to be expensive, insurance companies also need to look at applicants' credit reports to determine the likelihood of premium defaults.

When an insurance company performs a credit history check, its personnel don't look into it as deeply as a lender might. It only needs a general search to see how dependable an applicant is. An insurance credit history check, then, is usually a soft check and not a full one.

If you order a copy of your credit report, you'll see all your insurance company inquiries on it. Many consumers are alarmed to find these inquiries. They fear that they could hurt their credit score. They need to remember, though, that these are soft checks - they appear only on the consumer's credit report copy. Lenders don't see these checks on their copy. Only rarely do soft checks show up on lenders' credit history copies. These are mistakes, though, and can be corrected through an application to the credit reference agency.

When you shop for credit and have soft checks done, do you get reliable results?

For more info on credit rating issues and even investment options available the author Sam Jones suggests going to the comparison website uSwitch.