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.

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.

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.

If you pay in full, a six-month car insurance policy will typically cost less due to its shorter coverage period. However, if you're paying month-to-month, you may not notice much difference in price between a six-month and 12-month policy.

According to our rate estimates, the best companies with cheap auto insurance for those with lower credit scores include USAA, Geico, Nationwide and Progressive.

Become an authorized user

One of the fastest ways to build credit is by becoming an authorized user on someone else's card, like a family member or close friend. You can piggyback off the primary cardholder's credit and establish your credit history.

Make timely payments on other loans and accounts

Your payment history is one of the most significant factors that go into calculating your credit scores. So you'll want to ensure you're making timely payments on any existing debt, such as mortgages, student loans and car loans.

According to Experian®, one of the three major credit bureaus in the U.S., “You typically need three to six months of credit activity recorded there before a score can be created.”

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.

Does canceling car insurance hurt credit? ›

Don't worry, canceling your car insurance won't hurt your credit score. But if you cancel your car insurance while you still have a car, future insurers will see that you had a lapse in coverage, which can raise your rates.

"Paying rent can build credit if your payments are reported," says Rod Griffin, senior director of consumer education and advocacy for the credit bureau Experian. "Unfortunately, that's not the norm, as most landlord and rent management companies don't report rent payments."

As you make on-time loan payments, an auto loan will improve your credit score. Your score will increase as it satisfies all of the factors the contribute to a credit score, adding to your payment history, amounts owed, length of credit history, new credit, and credit mix.

Insurance quotes do not affect credit scores. Even though insurance companies check your credit during the quote process, they use a type of inquiry called a soft pull that does not show up to lenders. You can get as many inquiries as you want without negative consequences to your credit score.

A good insurance score is roughly 700 or higher, though it differs by company.