Home Insurance Costs – How Credit Will Impact them.
You already know how important a good fico score is to getting approved for loans and securing the best interest rates available for them. But you probably didn’t realize the impact it has on your home insurance premiums. Yes, contrary to what you may have heard elsewhere, your credit score has a direct effect on how much you pay for homeowner’s insurance. For instance, according to PropertyCasualty360:
- Homeowners with bad credit pay up to 91 percent more in home insurance premiums than those with excellent credit.
- Homeowners with average or good credit pay almost 30 percent more than those with excellent credit.
- The FICO score is used by about 85 percent of the nation’s home insurance providers in determining risk.
- West Virginia, Washington D.C., Ohio and Virginia are where there’s the biggest discrepancy between premium costs for those with poor vs. excellent credit.
- California, Massachusetts and Maryland are the three states that prohibit insurers from weighing credit scores into home insurance premiums.
- Pay bills on time: This accounts for 35 percent of your FICO score, making on-time payment key.
- Get finances in order: If you can pay down your debt so that it’s around 30 percent of your total credit allotment, you’ll see your score rise.
- Check your credit: Get into a habit of occasionally checking your credit report and looking out for any errors. Errors are common and can negatively impact your score, so if you notice any discrepancies, contact that party and set the record straight.
- Don’t go crazy: Don’t think that closing a paid off account is the answer to credit repair. In many cases, it won’t. Why? Because when you close an account, you also reduce your total credit allotment. Conversely, opening new accounts to increase your allotment isn’t a great credit repair solution either – especially if you run those amounts up.