When you go shop your Homeowners Insurance rates, a majority of carriers will ask you for your Social Security number when they ask for your personal information for the quote. I personally get asked, “Do you really need that to determine my rate?”
The short answer is, Yes. Here’s why;
Credit-based insurance started in the 1990s and works much like the FICO score does for lenders. The “Insurance Score” really a scientific equation that insurance companies use in order to help them predict the likelihood of you filing a claim. Some things they look at are your debt payment history, account balances, recent credit applications and bankruptcy.
Now the good news, if you do have an issue with your credit, it doesn’t mean that you’ll be denied insurance or have an extremely high rate. Some insurance companies don’t even require it, however it could potentially give you a lower rate if you do let them check your credit. The inquiry also goes as a soft inquiry vs. a hard inquiry, so it won’t affect your overall score or hinder you in the process of buying a home.
Be sure to contact an agent to go over this with you. If you don’t have an agent and need a policy in Texas, please reach out to me:
Brad Harrell — Texas Insurance Guy
Owner at TWFG Harrell Insurance