A. Massachusetts does have a lot of laws, and a lot of consumer protections that you'll not find in most other states. But prohibiting insurance companies from checking the credit of an applicant for a homeowner's policy is not one of them.
Insurers can check your credit, but they can't just use the information they find any way they please, said Barbara Anthony, who heads the state’s Office of Consumer Affairs and Business Regulations. State law prohibits insurers from basing auto and home policy premiums on a consumer's credit. That may be the point of confusion for you.
“The use of consumer credit information is prohibited in the rating of home and auto insurance,” Anthony said. “Carriers are not prohibited, however, from using credit in making decisions as to whether or not to issue a homeowners policy in the first place.”
Federal law is protective of who can poke around in your financial business and when. Insurers, however, are among those who can. They’re looking at credit histories to try to avoid signing up those who under financial stress because they are deemed more likely to pursue claims.
On the bright side, a credit report run by an insurer will not affect your credit score. Such inquiries are not the same as those initiated by consumers applying for credit.
Those who haven’t done it yet this year, grab at least one of your credit reports (you’re entitled to one free credit report each year from Equifax, Experian and TransUnion) on AnnualCreditReport.com, and see who has been checking you out.
In addition to seeing credit and insurance applications, you’ll also find out if your credit card company took another look at your history, or a lender, hoping to entice you to borrow, determined whether you were qualified to receive a pre-approved loan offer. Your credit isn’t just anyone's business, but it’s good to see who has been poking around and try to figure out why.