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Lower Credit Scores Mean Higher Homeowner Insurance Costs

October 22, 2015

Managing Your Money

Articles

Homeowners with poor credit pay about twice as much for homeowner’s insurance as people with excellent credit, and homeowners with average credit pay 32% more than those with excellent credit, according to a new insuranceQuotes.com study.

Your credit score plays a role in the homeowners insurance premium that you will pay once you purchase a home. Insurance companies use information in your credit report to calculate an insurance score. Similar to a credit score, insurance companies use insurance scores to help them predict losses by determining which consumers are more likely to file claims.

An insurance company assigns an insurance score to any consumer who applies for an insurance policy. The more favorable your insurance score, the more favorable the insurance premium you are likely to pay. Like a credit score, an insurance score will consider your outstanding debt levels, the length of your credit history, how timely you pay your bills, your number of credit accounts and your new applications for credit. As with a credit score, a long, established credit history, the absence of late payments and collection accounts, low credit balances, and few new credit accounts will lead to a positive insurance score.

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.