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Does Your Credit Score Affect Your Homeowners Insurance?

October 21, 2014 by Lucy Lazarony

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. (You can see your credit reports for free once a year .)

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.

But your credit isn’t the only factor affecting your homeowners insurance premium.

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Other Factors Affecting Your Homeowners Insurance


Insurers also consider your prior insurance loss history, the construction type of your home, the distance of your home from fire hydrants and fire stations and whether or not you have smoke detectors, fire alarms and a security alarm in your home and other factors that vary from insurance company to insurance company.

Insurance companies may offer discounts on your premium if you and your family members are all non-smokers, if you are retired or if you have multiple insurance policies with the company.  So be sure to ask about these discounts when you apply for homeowners insurance coverage.

Keep Your Credit Score At Its Best

Because your credit is such a strong factor in determining your insurance premiums, it’s a good idea to check your credit report and correct any errors before applying for an insurance policy. You can also see your credit scores for free and get a break down of your credit data on

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Category: Credit

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