In this article:
- Why Insurance Companies Don’t Report to the Credit Bureaus
- How Insurance Payments Could Influence Your Credit Report
- Which Companies Report to the Credit Bureaus?
Insurance companies don't report information about your premium payments or claims (or lack thereof) to the national credit bureaus. Some insurers use credit checks to help set your premiums, however, and failure to pay insurance bills could lead to negative entries on your credit report. Here's how it all works.
Why Insurance Companies Don't Report to the Credit Bureaus
The three national credit bureaus (Experian, TransUnion and Equifax) compile information about your history of borrowing and repaying debt in the forms of installment loans, such as mortgages, auto loans and student loans, and revolving credit, such as credit cards and lines of credit.
When you purchase insurance coverage, you agree to make premium payments on a schedule spelled out in your policy. The insurance company isn't lending you money, and the contractual obligations to pay insurance premiums aren't considered debts, so insurance companies don't report payments (or any other information about your coverage or claims) to the credit bureaus.
Insurance companies may consider your credit when you open your policy, however. Insurers in many states, most notably auto insurers, may use what's called a credit-based insurance score to help determine your premiums. That's because insurance companies have found that an insured person's credit health can help predict how likely they are to file a claim.
How Insurance Payments Could Influence Your Credit Report
The likeliest consequence of failure to pay insurance premiums is that the insurer will cancel your policy. Depending on the type of policy, that could expose you to devastating expenses in the event of an accident, illness or other catastrophe—as well as legal liability if you drive without auto coverage. Non-payment of insurance bills can also have negative consequences for your credit reports and scores, however.
While insurers don't report your payments (or non-payments) to credit bureaus, unpaid insurance bills will affect your credit report if the insurer turns them over to collection agencies. Whether a loss-recovery department within the insurance company itself or at a third-party firm is handling the account, accounts in collections are typically reported to the credit bureaus. A collection entry on your credit report will remain on your credit report for seven years from the date of the missed payment that triggered it. Accounts in collection tend to lower your credit scores for as long as they appear on your credit reports, but their impact will lessen over time.
Which Companies Report to the Credit Bureaus?
Insurers don't file reports with the national credit bureaus, but the following do report your payment activity:
- Mortgage lenders, including banks, credit unions and online financing companies
- Student loan providers, including private lenders and issuers of federal student loans
- Credit card issuers, including banks and other financial institutions as well as retailers and their lending partners
- Auto finance companies
Landlords and property managers have the option of reporting rent payments to credit bureaus, but few of them do. If present in your credit report, only the newest versions of the FICO® Score☉ and VantageScore® scoring systems will factor rent payments into your credit scores.
Reviewing your credit scores regularly can give you a good idea what lenders and insurance companies will find when they check your credit. You can check your Experian credit report and see a FICO® Score based on it for free every month as part of the through Experian. You'll also be alerted whenever there's new activity on your Experian credit report.
