Do Insurance Companies Report to Credit Bureaus?
Learn the precise relationship between your insurance activity and credit report, including how information is used and what might appear.
Many consumers wonder about the relationship between their insurance policies and their credit reports. Unlike traditional lenders who routinely report payment activity to credit bureaus, insurance companies operate differently. Understanding these nuances is important for managing your financial standing.
Insurance Company Practices and Credit Reporting
Insurance companies generally do not report your regular premium payments to the three major credit bureaus: Experian, Equifax, and TransUnion. This practice applies across various types of insurance, including auto, home, life, and health policies. Insurance premiums are not considered a form of credit or debt, but rather a payment for a service.
However, insurance-related information can appear on your credit report in specific instances. When seeking insurance quotes, companies often perform a “soft inquiry” into your credit history. A soft inquiry allows the insurer to review aspects of your credit report to help determine a premium. It is visible only to you and the company that performed it and does not impact your credit score.
The most significant way insurance activity can negatively affect your credit is if unpaid premiums are sent to a collections agency. Once an account enters collections, it is reported to credit bureaus and can significantly harm your credit scores.
Credit-Based Insurance Scores
While insurance companies typically do not report your payment activity to credit bureaus, they frequently use information from your credit report to generate a “credit-based insurance score.” This score is distinct from the FICO Score or VantageScore that lenders use to assess creditworthiness. Insurers use these specialized scores to assess risk, predict the likelihood of future claims, and help determine the rates you pay for policies such as auto and home insurance.
These scores are calculated using various factors from your credit data, including your payment history, the amount of outstanding debt, the length of your credit history, and your credit mix. For example, a strong history of on-time payments and low credit utilization can contribute to a favorable insurance score. It is important to remember that this process involves the insurer pulling your credit data for their assessment, not reporting information about your policy or payments back to the credit bureaus.
Insurance-Related Entries on Your Credit Report
Specific types of insurance-related entries may appear on your credit report. Soft inquiries initiated by insurance companies when you obtain a quote will be recorded. These inquiries are informational and do not negatively affect your credit score. They are often visible only to you and the inquiring entity.
A more impactful entry arises if unpaid insurance premiums lead to a collection account. If an insurance company cannot collect overdue premiums, the debt may be sent to a collections agency. This collection account will then be listed on your credit report, indicating a derogatory mark in your payment history.
A collection account can remain on your credit report for approximately seven years from the date the original account first became delinquent. Such an entry can significantly lower your credit score and remain visible to other creditors for that duration.
Accessing and Reviewing Your Credit Information
Regularly reviewing your credit information is a prudent financial practice. You can obtain a free copy of your credit report from each of the three major nationwide credit bureaus—Experian, Equifax, and TransUnion—once every 12 months at AnnualCreditReport.com. This site allows you to access your reports online, by phone, or by mail.
When reviewing your credit reports, carefully examine any inquiries from insurance companies. More importantly, check for any collection accounts, particularly those related to unpaid insurance premiums. If you identify any inaccuracies or information that appears incorrect, you have the right to dispute it with the credit bureau and the entity that provided the information. The dispute process involves contacting the credit bureau in writing and providing details of the error. Correcting errors promptly helps ensure your credit report accurately reflects your financial history.