We all know that a lower credit score is never a good thing, especially when you’re trying to buy a home. Interest rates can be higher, and loan amounts can be smaller, when you have poor credit ratings. But did you know that your credit score can also affect other aspects of your real estate transaction?
Many buyers don’t know that a lower credit score can cause you to pay higher homeowners insurance premiums than someone with a higher score. In fact, homeowners with poor credit pay about 91% more for insurance than people with good credit, according to a new report from Brankrate.com and insuranceQuotes.com. Homeowners with decent, but not great, credit scores will still pay 30% more than homeowners with excellent credit. This is just one more reason why your credit rating is such an important aspect of your life. Because insurance companies in different states each have their own ways of calculating risk and deciding premiums, there are no set rules to how much they can charge you based on your credit score. One thing is sure though: the poorer your credit, the higher an insurance risk they will consider you.
Here’s an NPR video about the issue that explains in more detail the relationship between your credit rating and your homeowners insurance premium: