Many insurance companies do check credit scores when determining insurance rates. It is true that credit rating companies such as Experian, Trans Union and Equifax have been known to use inquiries towards your credit report to impact your credit score. Those queries that affect your credit score are queries for obtaining credit NOT inquiries that review your credit (like an insurance quote) or use credit as a portion of your insurance score.
The exact formula for calculating credit scores are closely guarded secrets. However, most recently developed credit scores usually recognize when a consumer is shopping for insurance and either ignore multiple inquiries or count them as only one inquiry if they occur within a specific period of time.
Fair Isaac has disclosed the following components and the approximate weighted contribution of each toward a credit score:
- 35% punctuality of payment in the past (only includes payments later than 30 days past due)
- 30% capacity used: the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
- 15% length of credit history
- 10% types of credit used
- 10% recent search for credit and/or amount of credit obtained recently
The above percentages provide very limited guidance in understanding a credit score, but you can see that a query to see a credit score is not weighted, whereas a query for actual credit is weighted.
For more information on credit reports and insurance rates see our article Understanding How Your Credit History May Affect Your Car Insurance Coverage.