Credit score and insurance

In almost all areas of your life, your credit score is important. Whether you're buying a home or vehicle, applying for a loan or trying to rent an apartment, your score may determine if you're a qualified buyer, renter or borrower. When it comes to  homeowners insurance, your score can have a significant impact on your premium rate.

According to a report from, homeowners with poor credit scores pay up to 91 percent more for a homeowners insurance policy compared to those with good credit. Compared to those with excellent credit scores - generally considered those to be 750 or more - median credit score holders pay 29 percent more on average.

"This is another example of why credit is such an important part of your financial life," said Laura Adams, a senior analyst from "Maintaining a good credit history suggests that you're a less risky customer and can lead to several hundred dollars in annual homeowners insurance savings."

States with the highest insurance prices
Not all areas of the U.S. have the same price fluctuations, which means you could be paying more if you live in a certain state. Here are the states with the highest premium increases after an excellent credit score is downgraded to fair, according to

  • Montana (65 percent)
  • Washington, D.C. (60 percent)
  • Arizona (55 percent)
  • West Virginia (53 percent)
  • Virginia (52 percent)
  • How to improve your credit score
    It won't happen overnight, but there are steps you can take to boost your credit score over time. Credit reporting agencies use a couple different factors to determine your score. A FICO score, which is the most commonly used score, is calculated by your credit history (35 percent), amounts owed (30 percent), length of credit history (15 percent), types of credit used (10 percent) and new credit (10 percent).

    Here's how you can improve your score:

  • Make payments on time: Late payments - even one or two - can have a negative influence on your score. To prevent your score from dropping any further, set up automatic payments or reminders so you're never late.
  • Pay off your debts: Having too much debt can reduce the amount of available credit you have and lower your score. Paying down your amounts owed so they are about 30 percent or less of your available credit will help your credit health.
  • Check your credit report: Each year, you are entitled to a free credit report from each of the reporting agencies, Experian, Equifax and TransUnion. You should request each report at least once a year to look for errors that could lower your score. If you find any, dispute them at once and do your best to have them removed from your record.
  • Avoid collection accounts: If you don't pay off a bill for a long time and the account transfers to a collection agency, it will stay on your credit history for seven years.

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