Can paying car insurance build credit? | Chase (2024)

FAQs

Can paying car insurance build credit? | Chase? ›

Sometimes it can seem like your credit score takes into account pretty much everything you do with money, from your credit usage to the age of your credit, to your types of credit. With all of these factors, it's worth asking-does paying your car insurance build your credit history? The short answer is no.

Unlike with loan payments, paying your car insurance premiums cannot improve your credit score. And buying car insurance won't affect your credit either — car insurance companies will do what's called a "soft inquiry" to check your credit when you shop for coverage.

Getting a car insurance quote should not affect your credit score. Car insurance companies do a "soft pull" when you get a quote, which doesn't influence your credit score. In contrast, a "hard pull" credit check impacts your credit score. Soft pulls only check some basic info and have no impact on your credit score.

Ways to improve your credit score

Paying your loans on time. Not getting too close to your credit limit. Having a long credit history. Making sure your credit report doesn't have errors.

Car insurance companies don't report your premium payments to the credit bureaus, so your policy won't appear on your credit reports. That said, you can get credit for on-time auto insurance payments on your Experian credit report by adding your insurance bills to Experian Boost^®ø.

Do insurance companies check your credit? Yes, auto insurance companies can conduct a soft pull of your credit to determine risk. They typically use your payment history with insurance companies and the age of your credit history to calculate your credit-based insurance score.

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

No, canceling your car insurance policy won't affect your credit score. Credit reports don't include information about when you purchase or cancel car insurance policies, which means there is no impact on your credit score.

What is the fastest way to fix your credit score? ›

Reduce the amount of debt you owe

Pay off debt rather than moving it around: the most effective way to improve your credit scores in this area is by paying down your revolving (credit card) debt. In fact, owing the same amount but having fewer open accounts may lower your scores.

Utility, cable, internet and phone bills

Paying your utility bills or bills related to cable, internet and the phone typically won't help your credit score. That's because these types of companies typically don't report payments to the credit bureaus.

One especially effective way to build credit is to open your own credit card account. Responsible credit card use, such as making timely payments and keeping balances low, can help you establish a positive credit history. If you have no credit history or poor credit, you may need to explore secured credit cards.

According to the III, if you have a better credit-based insurance score, an excellent driving history, and zero claims on your record, you'll typically qualify for lower rates. This score is only one of many factors used to calculate your premium.

Although making on-time monthly payments will eventually lead to a higher credit score, most car buyers will first experience a temporary reduction in their credit score. In short, buying a car can be a good way to build your credit score over the life of the loan, but it's more of a long-term credit building strategy.

Phone bills for service and usage are not usually reported to major credit bureaus, so you won't build credit when paying these month to month. However, through certain credit monitoring services, you can manually add up to 24 months of payment history to your report.

Your insurance score is calculated using factors of your credit history to determine how likely you may be to file a claim. Your credit score is calculated using many of the same factors, but it's used to determine how likely you are to go delinquent on a debt.