Will an Insurance Inquiry Appear on My Credit Report?

Federal Law

Under the Fair Credit Reporting Act, any time an insurance company, or any other company, accesses your credit report, an inquiry will appear on your report that shows the name of the company that viewed your credit file and the date of that inquiry. Inquiries remain on your credit report for two years. A hard inquiry occurs when you apply for a product or service based upon your credit, such as a loan or credit card. A soft inquiry occurs when your credit is accessed but not reviewed, such as when you view your own credit report.

Significance

According to Financial Web, obtaining a quote for insurance is considered a soft inquiry and such rate shopping will not impact your credit score. However, if you are actively applying for lots of other types of credit at different places within a short time, the scoring model will consider that risky behavior and it may lower your credit score. For credit score calculations, FICO only considers hard inquiries that occurred within the last 12 months. It does not factor in soft inquires.

Considerations

Your FICO score ranges from 300 to 850. The impact inquiries have on your FICO credit score depends upon the number of recent inquiries, how recent the inquiries are and how many new credit accounts have been opened recently. Credit inquiries affect consumers with a short credit history more than those with a long credit history. Also, according to MyFico, a large number of inquiries, six or more, may indicate that the consumer is much more likely to file bankruptcy than a person with no inquiries at all -- lots of inquiries suggest the consumer needs to borrow money.

Prevention/Solution

Knowing what's in your credit report can help you spot identity theft. Hard inquiries on your credit report from companies that you have not applied for credit with may indicate that your identity has been compromised. According to the Federal Trade Commission, identity theft was the top consumer complaint of 2009. To help protect yourself, you can order one free copy of your credit report yearly from each of the three major credit bureaus through the Annual Credit Report website, annualcreditreport.com. If you believe you are the victim of identity theft, place a fraud alert on your credit report by calling the credit bureau using the phone number found on your credit report.