You might be wondering what your credit score has to do with your home insurance premiums.
You call for a home insurance quote and your agent tells you they need your social security number to pull a credit check on you. Why? Believe it or not, all insurance companies perform credit checks now.
You may be asking, why should I have to give up my social security number? What is the connection?
That raises a few questions:
- Why are they pulling my credit score?
- Will checking my score lower my credit rating?
- Why should I look for ways to increase my credit rating?
Why do you need a credit score to check home insurance rates?
First, you can relax, knowing that your insurance company respects your concerns and will do everything to protect your identity. The reason they are using your credit score is because the historical data shows a direct connection between good credit and being a good risk, versus having poor credit and being a poor insurance risk.
As a result, those with a poor credit rating may pay more for homeowners insurance than those with a good credit score. In fact, those with excellent credit may save up to 50% over those with a poor credit history, depending on what state they live in.
We hate to be the bearers of bad news, but we don’t make the rules. However, we promise we will do everything we can to help you.
Will checking my credit score lower my credit rating?
First, please understand, they will only be doing a “soft check” on your credit.
What is a soft check? Simply put, a soft check will merely check your credit score and will NOT count against you as an “inquiry” on your credit report. This is very different than the usual “hard checks” that are required. What does this mean for you? This means you can get as many insurance quotes as you like and it will not count against your credit score!
Why should I look for ways to increase my credit rating?
Doesn’t it make sense to you that if a poor credit score causes your homeowner’s rates to go up, then the opposite would also be true?
When you work at increasing your credit score it will lower home insurance premiums. In fact, you can talk to your agent about your credit score increase once a year when you get your annual insurance check-up.
If you would like to have a homeowner’s insurance checkup right now to discuss your credit score contact your InsuranceHub representative right now.