I learned this past week that my homeowners insurance will be factoring in not just credit score in pricing premiums but specifically the frequency of new credit account opening.
Coincidentally I heard from reader Kim A. in Florida that her insurance company is doing the same thing,
Starting next month, the company is going to adjust (translation: raise) rates based upon the policyholder’s credit score.
Clearly stated in the notice is that the more credit cards are applied for, and/or opened by the policyholder, the higher the Homeowner’s Insurance rates will be.
Also, the company will be taking into account the frequency with which the policyholder applies for and/or obtains a new credit card.
We have different insurance companies. And while credit scores (as well as credit-based insurance scores) as a factor in insurability isn’t new, and in setting rates as well, the description of using the number of new credit accounts entirely apart from credit score as a determinant of rates was new to me.
So I guess I have something new to understand: how many is too many for my insurance company, what that will do specifically to rates, and whether that will mean other companies offer cheaper insurance as a result? Because just what I wanted to pay more attention to is my homeowners insurance policy.
If you’ve already read up on this issue or dealt with it, please hit the comments. Could it be that both my insurance company and Kim’s were imprecise, they really were just talking about credit scores (and opening card accounts influences score) or is this actually a new and separate rate factor as both companies seemed to suggest?