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Home Owners Insurance and credit scores

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New Member

Home Owners Insurance and credit scores

I recently recieved a letter from my Home Owners Insurance company saying that due to my credit report from LexisNexis that they were going to raise my insurance premiums. They ended up raising my annual premium from $870 to $1,010. I'm confounded with this as my scores are 799, 798, and 762. I have only one late payment (60 days) on a department store credit card for $69 that's 2 years old. My wife and I thought the other one was going to pay it. I have only one  inquiry from last year 2016 based on a new auto lease. I use 2% of my available credit, and there's no other factors that could be used? Is this a ploy to raise my premiums? Thoughts? thanks

Message 1 of 12
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Senior Contributor

Re: Home Owners Insurance and credit scores

When you get the AA letter, it will tell you who they pulled.  You should request a paper copy of the report from that CRA and just make sure it's clear other than the late.  Those credit scores should DEFINITELY approve you for the best insurance rate -- the only reason I am credit rehabbing is that I am a landlord and homeowner and my insurance rates are 20% higher than they need to be -- I was told 720 is the "prime" insurance rate FICO score.

 

I would try to goodwill that late with the department store.  If they say no, write more letters until they say yes.

Message 2 of 12
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New Member

Re: Home Owners Insurance and credit scores

thank you for the reply, i'll do that. thanks 

Message 3 of 12
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Moderator Emeritus

Re: Home Owners Insurance and credit scores

Sometimes insurance companies are looking for every honest deduction to raise rates. You may well want to shop your insurance. In my past I was a loyal never use the auto or home owners insurance type and the rates kept going up. Talked to the captive agent and he told me the company favored school teachers and new insured who got 10% discounts. I said what about no loss and time of service loyalty ... he told me there were better insurance companies in the market place and I should move my business as he could do nothing for me ... and I did just that with results that lowered my rates (was I dumb or uniformed loyal insured?). As to a rant ... they can just rate insurance on our loss ratio and stuff the credit part of it!!! Smiley Wink
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Current Score: 824
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Message 4 of 12
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New Member

Re: Home Owners Insurance and credit scores

Thank you, and as a side note I called the Dept. Store and they removed the late report since after reviewing it they found an "error" (instead of a courtesy) so they will remove it. thanks for the suggestion to go back to them. I think this is nothing more than a ploy by the insurance company, but as you stated above, i'm shopping around. 

Message 5 of 12
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Senior Contributor

Re: Home Owners Insurance and credit scores

Also check your Lexis Nexis and Innovus and any other credit reports insurers may pull. There are probably 20 other CRAs out there
Message 6 of 12
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Super Contributor

Re: Home Owners Insurance and credit scores

The insurance industry uses a different credit scoring model from FICO 8.  It is different enough that a person can have a great FICO 8 score and at the same time a medioce to bad LN Auto score.  Thus the three FICO 8 scores you give us don't tell us anything about your LN score. 

 

Moreover, the LN model has a different scoring range.  A person can have a FICO 8 of 810 which is an A or A+, but the same 810 is actually a C- in the LN model.  In your case your LN score could be a D- (using a high school metaphor) when your FICO 8 was a B+.

 

The actual factors in the LN model are different -- for example LN cares whether you have any store cards (bad) whereas FICO does not care.  That's just one of many examples.

 

The LN models draw their data from Equifax but again your LN score could be very different from your FICO 8 drawn on Equifax.  LN makes a model designed for home insurance and another for auto insurance.

Message 7 of 12
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New Member

Re: Home Owners Insurance and credit scores

You were correct, I ran my Property Insurance report on Lexis Nexis and was rated "average credit risk" with a 775, ironically a 776-997 and up is "good". (seriously? LOL) the reason's were based on two factors:

1) Length of Time Sales Finance Accounts have been Established Auto - Less than 9 months is better Property - 24 months or less is better 1. What information is this message derived from? The score considers how long you have had accounts with sales finance companies. A sales finance account is usually associated with high-ticket retail items such as furniture, stereo, piano, etc. 2. How does this affect my insurance risk score? Insurance industry research shows that consumers who have a long established account history with sales finance companies have more insurance losses. 3. What can I do to improve this aspect of my score? You can close these accounts, however they will stay on your credit report for seven years after you close them. 

2) Number of Accounts that have been Established Property - 12 or less is better 1. What information is this message derived from? The score considers the number of accounts that you have opened. 2. How does this affect my insurance risk score? Insurance industry research shows that consumers who open a large number of accounts experience more insurance losses. 3. What can I do to improve this aspect of my score? Once you have opened an account, regardless of whether you use it, your score will be impacted by this factor. 

I have 15 open credit accounts which includes my auto lease and mortgage. So I'm over the 12 they prefer. 

I have an auto lease payment that's 36 months long so not sure how to avoid that one. 

 

I certainly learned a lot in this process, especially how even good credit risk is not necessarily equilivilent to low risk for property insurance. 

I'm thinking I can close all of the misc cards I have and do not use, and there are 4 of them that I never use, which would put me below the 12 limit. 

Any other thoughts or suggestions? thanks 

Message 8 of 12
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Moderator Emeritus

Re: Home Owners Insurance and credit scores

stokes before you start closing cards and going crazy over the whole situation there are many insurers in the market place. They do not all rate things the same. It takes minimum effort to shop your insurance. You could contact captive agents and independent agents to see if they cannot in fact come up with better rates. For reference many independent agents offer access to many companies and using the technology of today can shop several companies at the same time. Captive agents are at the mercy of their singular underwriters but some can offer good rates. My independent agent shops my insurance through thirteen companies that the access using an insurance software program and they do soft pull inquiries from various sources. Try the shop the insurance approach. Closing cards etc. is not going to guarantee the results you might want.
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Message 9 of 12
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Super Contributor

Re: Home Owners Insurance and credit scores

I would certainly consider closing all Finance Company Accounts, since FICO doesn't like them either.  Closed FCAs my harm your score just as much, so I can't promise you how much that will help.  You should certainly never open another FCA.

 

If I read your thread right, your reports are dirty but will become clean once you get that late removed.  LN will like you better when you do that as will FICO, so you may wish to delay your rate shopping until your reports are all clean.

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