September 22, 2006
Do You Know Yourself As Well As Your Insurer Does?
If you are shopping around for affordable homeowners insurance, you need to know this bit of info—the insurance company knows your credit profile. They have probably checked into your insurance score to know how you fare. Companies need this information to do business with you as this score can affect just about everything – from the amount you pay for your insurance to whether a bank will let you open an account.
If this scares you, here’s a bit of good news: you too can avail of this information. The Fair Credit Reporting Act allows you to get copies of these reports, improve your scores and correct errors, all of which could save you money. Let us take a look at one thing insurers check most: your credit-based insurance scores.
Put simply these scores are a combination of many factors like your past homeowners-insurance claims and credit score. Insurers use these scores to determine the likelihood of you filing an insurance claim in the next one year. Yes, I know this sounds a bit like hedging or gambling. But, hey they got to make money too! So, now that you know how this score is calculated, here’s how your score can go really down: previous insurance claims, not-too good credit report data including bankruptcies and liens, and the ratio of debt-to-credit limit on your credit cards. All this goes into determining the your rates when you apply for a policy.
If your credit is not too bad and you haven’t had a bad financial past, you will not find it difficult to get a homeowners insurance policy at a good rate. However, if that isn’t the case, here’s what you should do. First get a copy of your credit report. If you are denied insurance because of your score, the insurer might tell how to get a free copy of your report. Next, work to improve your score by avoiding small or unnecessary insurance claims. However, if you find an error on your report, immediately write to the appropriate department.
Don’t miss out this week’s Carnival of Real Estate hosted by Matrix. Our blog article Florida Losing Appeal is featured there.--
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