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Old 12-06-2006, 08:29 PM
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Default Insurance and credit score

I'm lazy and very rarely ever change insurance companies but a few weeks ago I had time to go over my policies and discovered an error on my general liability ins. They refunded me within a week ( Auto Owners) I also have truck ins. with them and figure I better get some other quotes for the truck. Received an offer from Liberty Mutual for auto ins. as a group plus savings through Wayne State Univ. Alumni Assoc.

First question is : do these group offers really help save, or are they just a ploy, then raise the rates later?

2nd : I took the group pin code to the Liberty Mutual site and started to fill out the app when I noticed they do credit checks.
I haven't bought new ins. in a few years but is this a common practice now? I have excellent score but from reading the thread here on credit scores it said every time one's credit is checked it costs 20 credit score points. So, if I get 3 estimates my credit score will drop 60 points?
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Old 12-07-2006, 09:54 AM
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YES, common practice has been for years in the ins. industry.

NO, you are not requesting credit, the insurance co is viewing your report as a "screening tool" much like all the offers you get in the mail from C/C's. The inquiry shouldn't harm you at all.
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Old 12-07-2006, 10:30 PM
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also requesting credit doesnt necessarlly drop your score.... only UNSECURE requests lower scores and only then if you have a high debt to income ratio... items like homes, and other realestate actually will raise your credit rating, I can Attest to that fact as my credit increased almost 75 points by buying a house which raised my secured to unsecured debt ratio up to a better and more aproovable level thus allowing a lower interest rate on the credit cards, auto loans and second morgage we took to finalize the down payment and closing... (20/80) loan structure.... the main first morgage didnt qualify for the lower rate (.25% difference) but the second did... all because of a credit inquiry for a secured item, insurance is a secured item, so it shouldnt effect it at all, but shopping every insurance company and accrewing lots of inquires in a very short time will drop it a point or 2 but only for a couple months or so as the inquiries are not processed upon for credit requests

Last edited by npartin; 12-07-2006 at 10:34 PM.
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Old 12-08-2006, 08:33 PM
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My wife is in the lending business and suggests for the best information go to http://www.myfico.com/CreditEducation/ for the best information on credit scoring. They are the industry leaders and create most scores used by banks these days. It seems many people have different ideas on how scoring works, and most often the information you receive is not accurate. Just a few notes, insurance companies do check credit and have for years, and inquries don't hurt your score unless you have no other credit, or you make a lot of inquiries in a short time for something other than a car purchase or a mortgage ( they let you shop for those and only count it as one inquiry) check out the site for more info.
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