Bad Credit May Double Your Homeowners Insurance
Having a bad credit score may affect more than just your lending options. A recent study shows that bad credit scores could almost double the cost of your homeowners insurance.
The study compared the average price of homeowners insurance for people at different points along the credit score spectrum. It showed people with fair credit paid an average of 29% more for insurance than those with excellent credit, and people with poor credit paid 91% more than those with excellent credit. Having poor credit could nearly double your homeowners insurance premiums.
Many survey participants were unaware that their credit history had an influence on their homeowners insurance. Approximately 85% of homeowners insurance companies use a person’s FICO score to determine the costs of premiums. Most companies will also pull a person’s credit history to look for outstanding debts, collections and late payment history. The more “credit worthy” a person is, the less he has to pay for insurance.
If your credit score has recently improved, you should talk to your homeowners insurance provider about having your account reevaluated. Doing so could reduce your premiums because you have proven that you can be trusted to make payments on time. You may also ask for a rate reduction if you have been with the same provider for at least a year, as long as you have made consistent on-time monthly payments.