Does Life Insurance Require a Credit Check?

What Is a Credit-Based Insurance Score?

Credit-based insurance scores are used by insurance companies, including life, home and auto insurers, to predict how likely you are to file a claim that costs the insurer more than your premiums. When you apply for life insurance, the insurance company may check your credit-based insurance score.

Sometimes called insurance scores, credit-based insurance scores are generated using data from one of your consumer credit reports. This information might include:

• The payment history of your credit accounts
• Credit card balances and limits
• Any past-due debt
• Any accounts in collections
• Any bankruptcies
• Recent applications for new credit
• The age of your credit accounts

Some credit-based insurance scores also use information from sources other than your credit report, such as data from public records.

Tip: Some states limit how insurance companies can use your credit information, but these restrictions may only apply to home and auto insurance.

Credit-Based Insurance Score vs. Consumer Credit Score

Both credit-based insurance scores and the consumer credit scores used by lenders are calculated using data from your consumer credit report, but they differ in a few important ways.

• Different purposes: Credit-based insurance scores predict how likely you are to file a claim that will cost the insurance company more than you paid in premiums. Consumer credit scores predict how likely you are to fall more than 90 days behind on debt payments in the next 24 months.
• Different scoring ranges: Consumer credit scores generally range from 300 to 850, but credit-based insurance score ranges can be very different. Insurance companies can also choose from multiple credit-based insurance scores developed by different sources, such as FICO, TransUnion and LexisNexis. Some insurers even develop their own scores.
• How to access scores: You can access your Experian credit report and FICO^® Score^Θ for free, but it's not as easy to get a copy of your credit-based insurance score. You can ask your insurance agent if they have access to the score and can share it with you, but that's not always possible.

Learn more: Credit Score Basics: Everything You Need to Know

Do Life Insurers Check Your Credit?

Life insurance companies may check your credit to streamline the process of underwriting or assessing your risk. Checking credit-based insurance scores can help an insurance company determine whether they need more information (such as a medical exam) before issuing a life insurance policy, and how much to charge you. Depending on the results of your credit check, you may be able to get approved for life insurance faster, with no (or limited) medical exam.

Credit data can be effective in predicting mortality risk, a study by global insurance company Munich Re reported. The use of credit checks as part of automated insurance underwriting has declined in recent years, according to 2024 Munich Re data, but 56% of insurance carriers still conduct credit checks at least some of the time.

Your application for life insurance might be rejected if a credit check predicts you're likely to have difficulty paying the premiums. For example, factors such as bankruptcy, significant outstanding debt or a history of late payments could make it more difficult to get life insurance.

Learn more: How to Buy Life Insurance Without a Medical Exam

What Else Influences Your Life Insurance Costs?

Even if your insurance company performs a credit check, factors related to your health typically have a bigger impact on your insurance costs. Life insurance carriers generally consider the following when setting your premiums:

• Age and sex: A younger person is statistically less likely to die soon; women usually live longer than men.
• Health history: Your physical and mental health history and prescription drug use can affect your premiums.
• Family medical history: You may pay more for life insurance if your family has a history of certain illnesses or hereditary diseases.
• Occupation: Your job can also affect your costs: Working in an office is less dangerous than being a firefighter, police officer or construction worker.
• Lifestyle: Regular tobacco use or heavy drinking, as well as dangerous hobbies like skydiving or rock climbing, increase your risk and may mean higher premiums.
• Motor vehicle and criminal records: A history of auto accidents or a criminal record can indicate risky activities that could make life insurance more expensive.
• Type of policy: A longer-term life insurance policy with a higher benefit amount will cost more than a shorter-term policy with a low benefit.

Life insurance companies collect this information from a range of sources, including what you share on your application, your medical records and (possibly) a medical exam. Insurance carriers also buy information from consumer reporting companies. For example, MIB Inc. creates MIB consumer reports with consumers' medical conditions and hazardous hobbies. Milliman IntelliScript offers consumer reports with histories of consumers' prescription drug purchases.

Similar to checking your credit with the consumer credit bureaus, federal law may allow you to request a free copy of your consumer report (if one is available) from these companies at least once every 12 months. The Consumer Financial Protection Bureau (CFPB) has a list of consumer reporting companies, along with their contact information.

Learn more: Factors That Affect Life Insurance Costs

Will an Insurance Credit Check Impact Your Credit Score?

An insurance credit check won't affect your credit score. When an insurance company checks your credit report or credit-based insurance score during the application review process, it's considered a soft inquiry. Soft inquiries don't impact your credit scores either positively or negatively.

A hard inquiry credit check may occur when you apply for a credit card or loan. Each hard inquiry could lower your credit score, although the effect is usually minimal and temporary.

Learn more: Hard Inquiry vs. Soft Inquiry: What's the Difference?

How to Improve Your Credit Score Before Buying Life Insurance

Improving your consumer credit score may have a positive impact on your credit-based insurance score, potentially lowering your life insurance premiums. Taking the following steps could help improve your credit scores.

1. Pay bills on time. Payment history is the most important factor in your credit scores. Consider using automatic bill payments to help prevent missed payments that can hurt your credit.
2. Pay down debt. The amount of debt you have, as well as your revolving credit utilization (mainly on credit cards), accounts for 30% of your FICO^® Score. To improve your score, aim to decrease your credit utilization ratio by paying down credit card balances. People with the highest credit scores tend to have utilization below 10%.
3. Limit applications for new credit. Multiple credit applications in a short period of time can multiply the negative impact of hard inquiries on your credit score.

Learn more: How to Improve Your Credit Score Fast

The Bottom Line

Purchasing life insurance helps to ensure that your loved ones are financially secure after your death. Although your credit is only one element of your life insurance costs, having good credit may make it easier to buy life insurance without a medical exam, and may lead to lower premiums.

You can check your FICO^® Score and Experian credit report for free to see if your credit score needs work and which actions will have the biggest positive impact. Consider signing up for Experian's free credit monitoring service too. It's an easy way to keep tabs on your progress and get alert of important changes to your credit.