Does Credit Score Really Affect Homeowners Insurance?

Nov 23, 2022

Homeowners Insurance

Homeowners Insurance and credit score

Insurance companies utilize your credit history as a significant factor when determining the cost of your homeowners insurance in Thousand Oaks. Insurers create your credit-based insurance (CBI) score based on information about your past financial conduct, such as how frequently you've missed or made late bill payments and how much debt you have.

A CBI score is generated differently for each insurer. Additionally, it's just one factor in determining how much your homeowners insurance will cost. Read on to learn more about how your credit score can affect your homeowners insurance in this blog.

How Is Your Homeowners Insurance Affected by Your Credit Score?

When you buy a home, your credit score significantly impacts the homeowners insurance rate you will have to pay. Insurance companies determine your insurance score using information from your credit record.

Insurance companies employ credit-based insurance ratings, similar to credit scores, to assist them in estimating losses by identifying which customers are most likely to make claims.

An insurance score is similar to a credit score because it considers your total amount of debt, the length of your credit history, whether you make on-time payments, the number of credit accounts you have, and any recent credit applications.

How Is a FICO Credit Score Different from a Credit-Based Insurance Score?

A FICO credit score measures your creditworthiness that lenders use to assess whether you're a good candidate for a loan.

A credit-based insurance score, such as the one used by most insurers, is based on information about your past financial conduct. This includes how frequently you've missed or made late bill payments and how much debt you have.

How Does Credit Really Affect Your Insurance Rates?

Your credit score can affect your rates for various reasons, including the type and amount of coverage you're offered. If you have a high credit score, you will have to pay less for home or other insurance.

Insurers use your credit score to set premiums for home, auto, and other types of coverage. Keeping a good credit score is essential to get the best rates possible.

Is It Possible to Get Homeowners Insurance with Bad Credit?

Yes, you can get homeowners insurance with a credit score of 620 or lower. However, your premiums may be higher than if you had good credit. Your insurer may also offer less comprehensive coverage or impose restrictions on your policy.

How to Boost Your Credit Score to Lower Your Home Insurance Rates?

There's no one-size-fits-all answer to this question since your credit score may vary depending on your situation. However, you can try the following tips to improve your credit score:

  1. Pay your bills on time- This will show lenders that you're a responsible borrower and reduce the chances of getting behind in debt payments.
  2. Keep a good history of credit card use- Your lenders will know that you can manage your finances responsibly and avoid costly credit card debts.
  3. Pay your debts as quickly as possible- This will help you improve your credit score and reduce the risk of paying higher interest rates on loans in the future.


Bottom Line

Your credit score can affect your home insurance rates, so keeping it in good shape is essential. You can boost your credit score by paying bills on time, keeping a good history of credit card use, and reducing debt as quickly as possible.

Udell Family Insurance Can Help You!

If you have questions about the rates of home insurance in Thousand Oaks or want to improve your credit score, contact our team here at Udell Family Insurance. Our agents are always ready to answer all your question.

Call Us contact us