In case you needed another reason to get your credit score in shape, here it is: A low score could more than double your homeowner's insurance premium.
According to a recent study commissioned by insuranceQuotes, home insurance rates for people with poor credit-based insurance scores were higher by an average of 114% compared to those with excellent credit. And this disparity is on the rise — up from 100% in 2015 and 91% in 2014. For those with fair credit, rates were an average of 36% higher.
Credit-based insurance scores are just another type of credit score used specifically by insurers, but the factors upon which it's based are similar to those used to determine the credit score that credit card companies look at. These can include things like total outstanding debt, length of credit history and payment history, and are based on information found in your credit report.
“Many consumers aren’t even aware that, in most states, credit plays a significant role in determining how much you pay for home insurance,” says Laura Adams, a senior insurance analyst with insuranceQuotes, in a statement. “So, even if you don’t plan on using credit to borrow money, it still affects your finances.”
Of course, where you live also impacts how much more you could wind up paying. The state with the greatest home insurance premium increases was South Dakota, where homeowners with poor credit pay just over 288% more than their excellent-credit counterparts.
States With Largest Home Insurance Increases
1. South Dakota; 288.1%
2. Arizona; 268.6%
3. Oklahoma; 248%
4. Nevada; 235.3%
5. Oregon; 234.9%
On the flip side, some states have much smaller increases. And if you live in California, Massachusetts or Maryland, it's prohibited for your credit-based insurance score to be used in determining your home insurance rate.
States With Smallest Home Insurance Increases
1. North Carolina; 0.2%
2. Florida; 25.7%
3. New York; 29.3%
4. Wyoming; 43.9%
5. Hawaii; 53.1%
Wherever your state falls on the list, how you manage your credit has a big impact on a whole lot of other things, from whether you qualify for a mortgage to the interest rate on your new credit card. If yours is in need of a boost, check out these tips for building — and keeping — good credit.