Using a price comparison website to get insurance quotes does not damage your credit score. Insurance quotation searches are soft searches -- only visible to you, not to lenders. However, paying by monthly instalments is treated as a credit agreement, running a hard search and appearing on your credit file.
Soft vs Hard Searches in Insurance
When you use a comparison site or get an online quote, the insurer runs a soft search to verify your identity. Soft searches are not visible to other lenders and have no impact on your credit score. A hard search occurs when some insurers formally check your credit history at the point of issuing a policy. This is disclosed in their privacy notice. (Source: ICO, insurance data guidance)
Monthly Insurance Instalments -- A Credit Agreement
Paying insurance premiums in monthly instalments is a credit agreement. A hard credit search is run, the agreement appears on your credit file, missed payments create late payment markers, and the APR is typically 20-40%. Paying annually is almost always cheaper.
Tip If you are about to apply for a mortgage, pay insurance premiums annually rather than monthly for at least 6 months before applying. Monthly instalment agreements appear as credit commitments and reduce your apparent disposable income in affordability calculations. |
The CUE Database
The Claims and Underwriting Exchange holds records of insurance claims in the past 5-7 years. It is entirely separate from credit agencies. Failing to disclose a claim on CUE will be discovered and can void your policy. (Source: Motor Insurers Bureau)
Important If you find an incorrect CIFAS insurance fraud marker on your record, challenge it immediately at cifas.org.uk. An unchallenged marker can result in being declined for insurance and bank accounts for up to 6 years. |
Disclaimer: This article is for information only and does not constitute financial or legal advice. Consult a qualified adviser for guidance tailored to your situation. Always check the FCA register at register.fca.org.uk before dealing with any financial firm. |
Frequently Asked Questions
Will comparing car insurance affect my mortgage application?
No. Insurance quotation searches are soft searches. The exception is if you take out a policy on monthly instalments -- that agreement appears on your file.
Do insurers look at my credit score when pricing my policy?
Some do, particularly for home insurance. The FCA requires insurers to be transparent about how they use credit data. (Source: FCA, data use in insurance pricing, 2022)
Sources
- ICO Insurance Data: ico.org.uk
- CIFAS: cifas.org.uk
- Motor Insurers Bureau CUE: mib.org.uk
