Will Hard Pull on Credit Report make home and auto insurance premium go up?

[John Galt III]

Even though they did a hard pull on my credit years ago to open my savings account at Penfed when I purchased CDs, they want to do another hard pull now if I open a checking account with them. (sigh) The checking account is a pretty good deal, but will the hard pull make my auto and home owners insurance premiums go up? I don't want to ask my insurance co for their input. I don't think the previous hard pull had any effect on my premiums but I'm not sure.

[RobbieB]

I wouldn't worry about it. The effect will disappear in a couple months anyway.

[kgtest]

Quote:

Originally Posted by John Galt III Even though they did a hard pull on my credit years ago to open my savings account at Penfed when I purchased CDs, they want to do another hard pull now if I open a checking account with them. (sigh) The checking account is a pretty good deal, but will the hard pull make my auto and home owners insurance premiums go up? I don't want to ask my insurance co for their input. I don't think the previous hard pull had any effect on my premiums but I'm not sure.

In my opinion, probably will raise the rate, if not just by a little. I feel like this is the first opportunity for an insurance company to assess risk, based off credit history.

Whether it's perceived the hard pull was for a good thing, or a bad thing, in the eyes of the insurer, it is just a hard pull that impacts the policy.

I recently refi'd and my credits FICO dropped like 40 points even pushing me into the Good level out from the Excellent. NOW, I saved $80,000 in terms of interest over the years, so a temporary increase of $50 for a 12 month policy was that small price to pay for opportunity.

I rolled some of my points into the loan, so the loan balance actually grew by just a couple thousand dollars...but all of that little whirlwind, pushed me up in debt, and the score went down.

How would I argue this with the insurer? Not too sure.

[jazz4cash]

As I generally mention every time the subject comes up, credit scoring is a scam IMHO. Just a way for the credit bureaus to eek out more revenue from all the data they’ve collected. Having your score drop due to a refi as kgtest reported is nonsense. I’ve always believed the connection between credit scores and insurance rates was a hoax unless you have terrible credit and/or you’ve never had insurance. I used to see occasional periodic inquiries from my insurers but I haven’t noticed that in a very long time despite having changed insurance companies. I wouldn’t worry about it.

[kgtest]

Absolutely a total scam...

Simple comparison.

I myself have financed/repaid MILLIONS of dollars worth of credit. DW on the other hand has financed 1 single auto loan for 10k 4 years ago. YET, SHE has the better "credit score".

So in the data, on the surface the lender looks at me, looks at her and makes a poor judgement that she is less of a lending risk. (of course this all aside from income and prior loans etc).

Technically if you are using credit wisely, the score would bounce around, and if you freeze it and do literally nothing, you will look like the better borrower.


100% total SCAM!

[FANOFJESUS]

Quote:

Originally Posted by kgtest Absolutely a total scam... Simple comparison. I myself have financed/repaid MILLIONS of dollars worth of credit. DW on the other hand has financed 1 single auto loan for 10k 4 years ago. YET, SHE has the better "credit score". So in the data, on the surface the lender looks at me, looks at her and makes a poor judgement that she is less of a lending risk. (of course this all aside from income and prior loans etc). Technically if you are using credit wisely, the score would bounce around, and if you freeze it and do literally nothing, you will look like the better borrower. 100% total SCAM!

Like Dave Ramsey says he has enough cash to buy the apartment complex but he can't rent a unit. He has no credit score.

[Aerides]

Any single credit inquiry should have negligible impact on your score - like ~10 points, and only briefly - it's weight will be half whatever it was in 6 months, and nothing in a year. Any insurance provider that said "welp your rates go up because of that" is full of garbage and should be replaced anyway.

[Rianne]

Quote:

Originally Posted by FANOFJESUS Like Dave Ramsey says he has enough cash to buy the apartment complex but he can't rent a unit. He has no credit score.

So true.

[LOL!]

No, it won't cause your insurance premiums to go up.

[Just_Steve]

I would have to say no also as I had two hard pulls last year and nothing happened.

[cathy63]

It depends what state you live in.

Quote:

A few states prohibit insurers from using consumer credit information – California, Massachusetts and Hawaii for auto insurance and Maryland and Hawaii for homeowners insurance.

https://www.uphelp.org/pubs/credit-s...nfair-practice

[John Galt III]

Hey, thanks for the responses! Just to be on the safe side, I'm going to wait until I pay my next annual insurance bill, which is soon, then authorize the hard pull and get some of those Penfed checks.

[FireFool]

The recent inquiries attribute variable is not one of the strongest variables in the credit insurance scoring that I've been exposed to. I'll also add if you only have the one inquiry it has nearly zilch of an effect - unless it pushes you into 3 or more in the past 30/60/90 days. Additionally many insurers don't regularly pull credit at renewal, relying mostly on credit at new business. As to another poster saying the connection between credit scores and insurance rates was a hoax - I've personally seen the analyses, using millions of records, credit definitely correlates with loss experience. Note that's different than saying it's causative. Next to actual driving experience it's one of the most predictive variables used in insurance rating, it's also something that is within the control of an individual to actually change, unlike age or gender (which are also predictive). The short of it is do not worry about a single inquiry.

[Senator]

A hard credit pull hits your rating by 3-5 points from what I hear. I do the same for all my tenants.

Quote:

Originally Posted by FANOFJESUS Like Dave Ramsey says he has enough cash to buy the apartment complex but he can't rent a unit. He has no credit score.

I likely would not rent to him either, based on his paper trail. He is an incredibly unknown quantity, other than his name, and in a fair housing situation, you need to treat everyone the same. Have a score or not, but be prepared to pay for it.

When an applicant of mine has a low score, almost invariably they have a more 'robust' criminal record. It is 100% controlled by the person and is color blind and not based on income or other protected factors. Even when a report is wrong, it is mostly inconsequential. Most credit errors have no effect, some have a little effect, and that translates to about 50% helping the credit score.

When you understand credit score and it's relationship to personal behaviors, you will understand why it is so important. You can make the same comparison to a lot of things. Like not having a high-school diploma weeds you out of many professional occupations.

Low credit score people have more insurance claims too. I do not need a claim on my properties.

When a person does not have a credit score, that are typically of two varieties. They are new to the credit world, or they dropped out of it. When people drop out of the credit world, they likely could not be responsible to use it.

Quote:

A few states prohibit insurers from using consumer credit information – California, Massachusetts and Hawaii for auto insurance and Maryland and Hawaii for homeowners insurance.

What are insurance rates, compared to other states, in those states?

[LOL!]

Quote:

Originally Posted by Senator A hard credit pull hits your rating by 3-5 points from what I hear.

Yes, but it won't affect what the OP pays for insurance which was their question.

[Senator]

Quote:

Originally Posted by LOL! Yes, but it won't affect what the OP pays for insurance which was their question.

Unless the OP is on the Cusp. I had a renter that bought a house. One of the couple had a 739 credit score. It cost an additional $1,600 in closing costs for the extra 1/2 point or so. A 740 would have saved the $1,600.

[Bruno]

Quote:

Originally Posted by jazz4cash As I generally mention every time the subject comes up, credit scoring is a scam. I’ve always believed the connection between credit scores and insurance rates was a hoax unless you have terrible credit and/or you’ve never had insurance.

I AGREE 100%. I have a daughter that has never had a wreck or a ticket but she does have BAD credit. She would LOVE to have insurance on her car but with her low credit score she can only afford insurance for a day to get her tag. Insurance should be based on your driving record.

[LOL!]

Quote:

Originally Posted by Senator Unless the OP is on the Cusp. I had a renter that bought a house. One of the couple had a 739 credit score. It cost an additional $1,600 in closing costs for the extra 1/2 point or so. A 740 would have saved the $1,600.

Yes, that makes sense when borrowing money. But borrowing money has nothing to do with insurance premiums.

[Senator]

Quote:

Originally Posted by LOL! Yes, that makes sense when borrowing money. But borrowing money has nothing to do with insurance premiums.

I know many insurance premiums are based on credit score. Or maybe it's a pass/pail thing.

Lower credit score have more claims, therefore higher risk and higher premiums. If credit scores impact premiums, there must be a cut-off somewhere.

Quote:

Auto insurance companies see a statistical correlation between creditworthiness and the frequency of auto insurance claims. Most providers use a special type of credit score to set your rates. https://www.creditsesame.com/blog/in...car-insurance/

[COcheesehead]

Sign up for Credit Karma. It shows you in near real time the effects of activity on your credit.