A mortgage refinance may have some negative consequences that you never anticipated.

Most people know that a meal in a Thai restaurant could bring on an allergic reaction, or that flooring it on the highway could lead to a speeding ticket. But who knew that a mortgage refinance could lead to a more expensive insurance premium?

You’ve heard of a credit score; that’s the number that lenders use to predict how reliable you are when paying back your debts. But you may not have heard of a credit-based insurance score-that’s the number that insurance companies use, in part, to predict whether you’re going to file a slew of claims that will cost the insurer a whole lot of money.

When an insurer needs to price your prospective policy, the underwriter will review your credit-based insurance score, along with the information in your application or policy, your claims history, your driving record, and property reports. All of these items give the insurer some insight into your level of risk as a customer to insure.

The credit-based insurance score focuses specifically on the likelihood that you’ll file a higher-than-average number of claims-a prediction based on the information in your credit report. If you’re deemed low-risk in this regard, you get a high score. If you’re deemed high-risk, you get a low score. Since more claims mean greater losses for the insurer, a low credit-based insurance score generally results in a higher insurance premium for you.

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