Credit Scoring and Homeowners Insurance

It is possible you could have the same house as your neighbor. Built the same exact year and you both moved in at the same time but they are paying $600 less than you a year and you have the SAME homeowners insurance company.

Why?

Majority of New Orleans Homeowners insurance companies are moving towards using your credit score to determine the price they charge you for insurance.

The belief, if you agree with it or not, is that your credit score can lead to an indication of the probability

  • you can pay your bills
  • more likely to make a claim

The insurance companies use your credit score obtained from Experian, Equifax and Transunion and use the credit score to develop an insurance score.  

raise your credit score

The insurance score can place you in a premium tier.  

Some companies can claim to have over 250 different premium tiers.

The good news is insurance company requests for your credit report are soft inquiry or “soft hit” and do not affect your credit score. 

The insurance company takes your credit score and combines it with reports from LexisNexis and FICO to develop an insurance score.

The insurance score is not your credit score.

The insurance score is calculated from the information on your credit report and the insurance company will use past policyholders accident history and their credit scores to determine a predictive insurance score.

 

The difference between a credit score and an insurance score?

Your Credit Score is based on your ability to repay amounts you have borrowed.

Your Insurance Score predicts the likelihood of you becoming involved in an accident or making an insurance claim.

 

How does an insurance company determine an “insurance score”?

They use the information on your credit report and combine it with past policyholders credit scores and claim data and can also include your past claim history.

The Good News?

You can not be denied an insurance policy based on your insurance score.

If you have poor credit, you will pay more than someone with better credit.

 

What can I do to raise my credit score?

First thing to do is obtain a copy of your credit report.

I have used annualcreditreport.com to obtain a copy of my credit report.

You can get a free copy of your credit report every 12 months from each credit reporting company.

After you receive a copy of your credit report, here are some things you can do to help raise your credit score.

Payment History

Timely payments will help improve your score

Amount owed?

If you owe a lot of money on numerous accounts it is possible you could be overextended.   

Pick one account and start knocking it down. Paying a little on a lot is not helping.

Length of Credit History

The longer you have had accounts open, the better.

This shows you know how to manage credit.

Any credit history under two years is not good.

There are many factors that can help raise your credit score,  but I listed a few to consider.

Experian offers some tips to help raise your credit score but unfortunately there is no quick fix.

 

What’s this all about?

Higher Credit Score does equate to Lower Insurance Premiums.

If you have poor credit and are having trouble finding a homeowners insurance company that will offer a reasonable quote, we do represent a few Louisiana Homeowners Insurance companies that DO NOT use credit to develop a premium.

Regardless of your credit score, We have options for you.

We even have a company that will accept you if you have filed bankruptcy.

 

WE MAKE IT EASY TO CONTACT US

Call us at 504.348.3131

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