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Articles

Does Your Credit Score Affect Your Insurance Cost?

Credit History

As landlords, we all know how important it is to run credit checks on rental applicants.  I’m looking for the words “As Agreed, As Agreed, As Agreed” down that right hand column.  I want to know if the applicants keep their agreements.

As investors, we all know how important it is to maintain a great credit report to get the lowest loan rates.

But did it ever occur to you that your credit report affects your insurance premiums?

Carrie Van Brunt-Wiley, Editor of the HomeInsurance.com blog gave permission to reprint her great article on the subject.  Enjoy!

“Your credit score and your insurance payments- what’s the connection?

“You’re likely not surprised when your loan officer asks for your social security number- a thorough credit check is standard when applying for a loan. However, many consumers are caught off-guard when a homeowners insurance agent asks for their social security number.  It’s widely debated, but quite commonly practiced- for an insurance carrier to use a customer’s credit score to determine their insurance premiums.

“What does your credit score really mean to your potential insurance carrier?

“While many businesses will use a consumer’s credit score to determine eligibility for a line of credit or to discern whether a deposit should be held for an advance of services, insurance companies actually perform a different type of credit inquiry that they use for a very different reason.

“A “Soft” Credit Check

“First and foremost, it’s important to know that when an insurance company runs your credit they are actually performing what is called a “soft” credit check which accesses only your credit score and is not reflected as an inquiry on your credit report. As you probably can surmise, this is different from a “hard” credit check that a lender, for example, may run which does show up on your credit report as an inquiry. Since credit inquiries from “hard” credit checks can hurt your overall score it’s good to limit these types of credit checks when shopping for a mortgage, for example. However, since insurance carriers only perform a “soft” credit check you can feel free to shop for multiple insurance quotes without worrying about hurting your credit rating.

“What they use it for

“Here’s where a lot of confusion, and sometimes even frustration, can set in from a consumer’s perspective. Once an insurance company has your credit score, they use it (along with many other factors about you and your home, car, etc.) to assign you an “insurance score”. This insurance score reflects your potential risk to the insurer.

“The insurance carrier then takes your risk potential and calculates your premiums. The more risk you pose, the higher your premiums will most likely be. This is where the real question comes in:

“What does poor credit history have to do with my potential to file a claim?

“If you’re asking this question, you’re not alone.

“There is much debate over the use of credit scoring as a way to determine risk, and therefore assign rates to insurance consumers. However, insurance companies defend the practice saying that studies have shown a direct correlation between a person’s credit score and their likelihood to file a claim. Therefore, consumers with a lower credit score often pay higher rates for insurance.

“Whether you agree with the practice or not, qualifying for better insurance premiums is just one other way that you can save money by keeping a good credit rating.”

Carrie Van Brunt-WileyAbout Carrie Van Brunt-Wiley
Carrie Van Brunt-Wiley, is the Editor of the HomeInsurance.com blogs. Carrie graduated from the University of North Carolina at Wilmington with a BA in Professional Writing and Journalism. She has been managing research and content development for the HomeInsurance.com network of sites since 2007.

Articles

“Own the Ground You Walk On”

MalichyToday Malachy, a little Pekingese, won best in show during the 136th annual Westminster Kennel Club dog show Tuesday, Feb. 14, 2012, in New York.

I’m a big dog lover, so I was very interested.

I heard one of the judges say that he loved the way Malachy “owned the ground he walked on.”

My life kind of passed before me as I remembered all the times that I did not feel like I owned the ground I walked on, and all the times when I did feel like I owned the ground I walked on.

But for the purposes of this blog post, I’ll stick to how it relates to landlording. 🙂

The first time I felt like a stranger on my own property is when Josh and I bought an 8-plex.  I arrived on a Saturday to clean a vacant apartment.  A little punk tenant immediately confronted me, and told me what he wanted to do to me and how he wanted to do it.

Holy crap!

My blood pressure went through the roof and I decided I better take a walk down the street.

I called my son, who was on the way to help me, and told him what just happened.

Then I wished I hadn’t done that.

So, I called the police and asked them if they would come have a talk with the punk, because my son is 6′ 3″ and the punk was 5′ 3″ and my son was probably going to come and defend my honor!

That was the first time I felt like a stranger on my own property.

The next time it happened was right after we bought an 18-plex.

A non-paying couple decided to try to start a mutiny.

They cornered me on one of my first days on the property and told me how horrible the area was and how horrible the property was…basically all of the reasons they had amassed to defend their position that they should not have to pay rent.

My guess is that these horrible oppressive tenants are why the former owners sold us these properties!!

I served them.  I evicted them.  I renovated the units.  I rented the units to nice people.

Now I own the ground I walk on.

Don’t let horrible oppressive tenants make you feel like you don’t own the ground you walk on!

Post

ONE COURT WIN FOR THE LANDLORDS

Landlords Claim Discrimination, Judge Agrees

Landlords were handed a victory by an appeals court in Minnesota that determined a city’s aggressive rental housing inspection program may be discriminatory.

The landlords filed a lawsuit earlier over the onerous building inspection program that forced some of them out of business, and made affordable housing in St. Paul a thing of the past.  To read the complete details and history behind this court ruling, go to: http://bbs2.mrlandlord.com/display.php?id=13968733.

Articles

Can Your Assets Survive a Lawsuit?

Agony of DefeatThe way you hold title to your property is often the determining factor to whether you will lose everything in a lawsuit. You can be sued more and more today because of your “legal status,” not because of your “actions.” The trend is away from finding fault. This is due to the  significant expansion of both “vicarious liability” which allows you to be sued for something someone else did, and “strict liability” which means you are automatically liable by statute and there is no defense.

Here are some distressing examples:

In environmental law, you do not have to be the person who made the mess. If you were ever in the chain of title, you can be sued after discovery of the environmental situation. For example, lead paint damage is a “strict liability” offense. And you will almost certainly find that your insurance excludes coverage for lead poisoning. This can destroy retired people.

If you have put all of your assets into a trust and one of the assets in the trust is sued (example: lead paint liability) then you could lose everything in the entire trust. (Remember, the purpose of a trust is to avoid probate. A trust cannot shield your assets from legal attack.)

If you are an employer you can be sued for the actions of your employees committed while acting within the scope of employment. “Negligent hiring” is the latest hot winning theory to confer liability onto an employer for actions taken by an employee outside the scope of employment. This occurs when an employee commits a wrong or violence against someone following an employer’s failure to research the background and character of the employee before hiring the person.

On June 26, 1985, the Supreme Court said that you could lose an asset due to joint ownership. As an example, if Mom and Dad put their home into a joint tenancy with their kids to avoid probate (often referred to as a “poor man’s will”), and any of the joint owners (the kids) is involved in a divorce, loses a lawsuit, or gets in trouble with the IRS – Mom and Dad could find themselves homeless.  More…

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Is “Trashed” a 4-Letter Word?