How Your Credit Can Impact Your Life Insurance Policy

Does having bad credit impact your life insurance policy? While your actual credit score won't effect your life insurance premiums, there is some information on your credit report that can.
By Kirk P.
Updated Dec 9, 2020
credit history
Why trust our opinion?

Our content follows strict guidelines for editorial accuracy and integrity. Learn about our and how we make money.

Some say your credit report has no impact on your premiums. Others claim that your financial history influences how much you pay.

What's the truth?

Here's what you need to know: Your credit score -- the actual number that appears on your credit report -- will have no impact on your life insurance premiums. The bad news, however, is some information on your report could influence how much you pay for your insurance.

Find the right plan for you!Compare insurance carriers in your area. It's 100% free.Get Quotes

Why Do Life Insurance Providers Check Your Credit?

Life insurance providers check your credit report so they can have a look at your financial history and personal information -- previous credit agreements you've had, for example. The provider calculates how likely it is you will make payments for your insurance in the future. Like any insurance, it's all about risk. Insurance providers prefer people who are "low risk" as they are less likely to owe them money.

What Do Life Insurance Providers Check on Your Credit Report?

There are some things providers check on your credit report, but they can't see it all. Life insurance providers don't know how many times you've checked your credit report in the past, for example.

Providers are only allowed to look at the information on your credit report that will help them decide on your application for insurance. They can then compare this information with the details you've included in your application.

Here's an example:

Say you enter your age as 47 on your application for life insurance. Life insurance providers will check this information with your age on your credit report and contact you if there is a discrepancy.

The same goes for information, including your name, address, and job, merely to mitigate risk. If you lie on your application for life insurance, you might have increased premiums or have your application rejected.

Companies will also look for information that might influence whether you make payments for your insurance. If you have had poor credit in the recent past, this might impact your decision-making skills and increase the chances of you not paying your premiums. Every provider has different policies, though, and financial difficulties won't bar you from life insurance.

Are Poor Credit and Unhealthy Lifestyles Linked?

Another reason why life insurance providers might look at your credit report is to determine whether your previous financial decisions reveal information about your lifestyle.

Some think people with poor credit are more likely to experience stress, and research shows that stress can bring on a whole heap of medical conditions. In the worst-case scenario, stress can even trigger an early death, which will likely result in a life insurance claim from a member of your family. This is why some providers might check previous credit applications with other lenders, debts, and bankruptcies.

However, every provider is different, and many companies don't consider these things. 

Can You Refuse to Share Your Credit Information With a Life Insurance Provider?

Unfortunately, most life insurance companies will ask to see your credit report to process your application. You can refuse to share this information, of course, but expect the lender to terminate your use, too.

What If Your Credit Report is Wrong?

If you believe there are inconsistencies in your credit report, you need to contact the company who left this information on your report, as well as the credit reporting agency. Making changes to your credit file can be a long process, however, and it will likely delay your application for life insurance.

What Can You Do About Poor Credit?

If you want to increase the chances of being accepted for life insurance or lower your life insurance premiums, it's a good idea to pay off any old debts. Paying off debt shows prospective lenders that you are in an excellent financial position and will likely make insurance payments in the future.

If you have old debts on your file, you might want to wait a while until you apply for life insurance. The longer your debts appear on your credit file, the less critical they appear to lenders.


Remember, your credit score will not influence your application for life insurance whatsoever. However, some of the information on your report might. This information might reveal information about your lifestyle that suggests you might not make payments for insurance in the future.

Find the right plan for you!Compare insurance carriers in your area. It's 100% free.Get Quotes