Does Getting A Homeowners Insurance Quote Affect Your Credit? - YouTube

Does getting a homeowner's insurance quote  affect your credit score? The truth is

is that there's all kinds of stories out there  about what affects your credit and what doesn't  

affect your credit. In this episode, we're  going to cut through the true from the false.

In this episode, we'll answer the question  if insurers check your credit when getting  

homeowners insurance, then we'll dive into how  your credit score can affect your insurance  

rates and we'll explore the credit based  insurance score. We'll also discuss reasons why  

insurers look at your credit score and how much  this affects you. Alright, let's get to it. Okay,  

so now you're a homeowner and now it's time to  shop for homeowners insurance. The best thing that  

you can possibly do for yourself is definitely go  ahead and shop different companies to get the best  

rates on homeowners insurance, it can vary widely.  And I'll give you an example from my home when I  

shopped homeowners insurance. My first quote  came back almost $1,000 more for the year than  

the second quote that I had gotten, I got a less  expensive policy. But it covered more than the  

more expensive policy. So shopping rates is going  to be really important. So do insurance companies  

pull your credit when you're shopping for  homeowners insurance? The truth is, is that a vast  

majority absolutely will pull your credit. After  all your credit is a tool to help them gauge how  

much risk you might propose to them. So the credit  score that they're going to use is called a credit  

based insurance score. It's called a CBI. Each  state has their own requirements when it comes  

to whether they can actually use a credit score  or not to evaluate you for homeowners insurance.  

Okay, now, of course, you can probably shop  different companies and you can find a homeowner's  

insurance company that's not going to pull your  credit, but you can bet that you're going to pay  

with higher premiums, and a more expensive  policy all the way around. If they can't pull  

your score to evaluate risk as pertains to your  specific situation, they're probably going to  

try to charge you as much as they could possibly  get away with. In other words, you're gonna pay  

at the top end and what you should be paying. In  some cases, people want to avoid the credit check,  

because they feel like an extra inquiry  on their credit profile is going to really  

do some damage to their regular scores. The  truth is, is that the credit scores that these  

companies are going to pull on, you are in  most cases going to have no impact at all.

It's not going to be a true credit pull because  you're not actually seeking credit. They're just  

trying to evaluate what risk you present to them.  So can your credit score affect your overall rate,  

you bet. We've already talked that your credit  score can definitely affect your overall rate.  

If you feel like your insurance is higher than  friends and family and people around you and  

you've done comparison shopping to people that  have also gotten homeowners insurance with the  

same company, odds are that your credit score is  not going to be high enough to get the best rate.  

So insurers are going to use a rating system to  evaluate how much risk you might present them.  

Believe it or not, there's a high incidence of  people that have lower scores, and filing higher  

claims and this is kind of across all insurance,  it might be for homeowners insurance, but it also  

applies to Auto Loan Insurance. There's going to  be that parallel that the insurance companies  

assume that the scores are lower, that they're  gonna be a higher probability of  

claims and they've actually got a lot of evidence  to support that this is actually something that  

happens with frequency. Now remember, this  scoring system for the insurance industry  

is going to be different than let's say, if you're  gonna go make an auto purchase, or if you're gonna  

go get a credit card, or if you're gonna go make a  mortgage purchase. So this is specific to just the  

insurance industry. While you don't have access to  your insurance score, or at least the scores that  

the insurance companies pull, you can bet that  it trends the same way that your actual scores  

will trend. So if you're looking at your vantage  score, or you're looking at your FICO score,  

and they're both trending in a certain direction,  in other words, your FICO score is above,  

you know, 740, 750, then you can bet on the  insurance side of things, you're going to pull an  

excellent score. And before we discuss whether an  insurance based score is a soft or hard inquiry,  

please like my video and subscribe to my channel.  I'll be working hard to bring you a video each  

week day over credit, lending, real estate and other  relevant personal finance topics. So we've talked  

about credit scoring on the insurance side and  what that looks like and how the insurance score  

is going to be a different type of score that  the insurance industry pulls, that's going to  

be different than if you're actually seeking  credit for other purposes. Your credit based  

insurance score gauges your overall risk that  might be presented to an insurance company.

Now in terms of your credit based insurance score,  they're going to have some of the same positive  

effects and negative effects as your regular  credit. Positive effects are going to be if you  

have a long credit history with no collections,  no late pays. You're not maxed out on your credit  

cards. All of those things get computed the same  way it does for your normal credit score, the only  

difference is is that the insurance based score is  going to be calculated a little bit differently.  

So when you apply for credit, whether it be for  a credit card, an auto loan or for a mortgage,  

applying for credit actually does hurt your credit  score. It's gonna hurt you and it's a hard inquiry,  

usually gonna cost you three to five points.  But these credit based insurance scores,  

when they're pulling credit for homeowners  insurance or any kind of insurance is considered  

a soft inquiry. In other words, it's not going  to hurt your credit score in any capacity. If  

you have credit challenges or just need help  with your credit then I have a gift for you,  

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