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Credit & Homeowners Insurance

By
Home Builder with Zeus Construction MA CS-114391

Credit affects so many things nowadays - the interest rate on loans, the required deposit amount on your utility account or apartment lease, the cost of your home or auto insurance.  Wait a minute!  My credit score can affect how much I pay for insurance?  That doesn't make any sense.  Or does it?

The truth is, almost every insurance carrier out there gives people with good credit better rates than those with 'bumpy' credit.

Since I work in the industry, I think I know the answer why they use credit as a rating factor, but I'd love to hear everyone's thoughts on the issue.

Posted by

Cameron Bagherpour
Builder, Developer, Investor
Zeus Construction
Canton, MA 02021
339-204-1004

John Barry Seattle Washington Home Loans
Home Loans - Kirkland, WA

pay your bills on time= good credit= running your life "safer"? i would love to see the facts behind the lower score= higher payments.

Jul 05, 2007 07:44 AM
Alan Mills - Creating Closer Communication
ACN - Spokane, WA

Now I have a BNI buddy who is a major insurance company rep. He saved me a fortune in premiums for auto insurance and keeps me updated with what I should be doing. For example: buy an UMBRELLA! Now, his company uses FICO scores to base their premiums BUT here's the thing. If the score has risen when it's time to change, they use the higher score. If the score has fallen - they keep the last one on file (which was higher!).

As for what the heck difference does it make to the indurance risk - I'm with John Barry. Take care of business and you are, logically, less of a risk. Now before you all freak out and say what about this person or that, sure, there are exceptions. Insurance works on averages and stats. Get an insurance BROKER to work hard to find alternatives.

Jul 05, 2007 07:52 AM
Don Carter
All Star Mortgage, LLC - Haverhill, MA

Tying insurance rates to credit scores just doesn't feel right - after all, credit scores are much more than just paying your bills on time.  I'd like to see what the correlation is between credit scores and risk.  

Jul 05, 2007 08:04 AM