Will My Credit Score Change My Insurance Rates in Tennessee?

I was recently asked this question by one of our clients here in Knoxville, and thought I would share the answer for our readers.

There are a lot of things that go into homeowners and auto insurance rates, and in Tennessee, credit is one of them. Some people don’t like that insurance companies use credit, and some have no idea it’s used at all.

How Tennessee insurers use credit

Tennessee allows insurers to use a credit-based insurance score as one factor in pricing auto and homeowners policies. State law sets limits: credit can’t be the only reason an insurer refuses, cancels, or nonrenews a policy, and if a serious life event such as a death in the family, divorce, serious illness, or job loss hurt your credit, you can ask the insurer to take that into account.

Does checking my credit hurt my score?

No. Insurance companies use what’s called a soft inquiry, which doesn’t affect your credit score the way a mortgage or credit card application does.

Will my rate drop automatically if my credit improves?

Not automatically. Insurers usually check credit when you first get a quote and may not recheck it every year. If your credit has improved significantly, we can ask the carrier for a re-score, where they re-run your credit (again, a soft inquiry) to see if it helps your rate. Most carriers won’t do this every year, so it’s worth asking only after a real change.

What else affects your rate?

• Your driving record. Tickets and at-fault accidents usually affect your rate for three to five years.
• Claims history on your home and auto policies.
• Bundling home and auto with the same carrier.
• Shopping your policy. Rates vary a lot between carriers, and an independent agent can compare them for you.

If it’s been a while since anyone looked at your rate, give us a call. We hope this was helpful!