ByBen Walker
When most people think about their credit score, they connect it to loans, credit cards, or mortgages. But did you know it can also impact your home insurance premium? In many states, insurers use what’s called a “credit-based insurance score” to help set your rate.
Why does credit matter? Insurance companies see a strong correlation between credit behavior and claim activity. In general, people with higher credit scores file fewer and less costly claims. As a result, insurers may reward those homeowners with lower premiums.
If your score is on the lower side, you may end up paying more for the same level of coverage. In fact, studies show that credit score differences can sometimes change premiums by hundreds of dollars per year.
The good news is that you’re not stuck. Improving your credit over time can lead to savings. Paying bills on time, keeping credit card balances low, and avoiding unnecessary hard inquiries all help move your score in the right direction.
It’s also worth noting that not every state allows insurers to use credit. California, Maryland, and Massachusetts, for example, prohibit credit-based scoring in home insurance. But in most places, it’s still part of the equation.
If you’re shopping for a policy and worried about your credit score, the best move is to compare quotes. Some insurers weigh credit more heavily than others, so shopping around can still save you money.
Your credit score isn’t the only factor insurers look at, but it’s one you can influence over time. By building healthy credit habits, you can protect both your finances and your home.
