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Study: Poor Credit Spikes Home Insurance Premiums as Much as 200%

—50-State Data Analysis Reveals Where Costs Increase Most, Least—

AUSTIN, TEXAS (May 3, 2017) —“What’s your credit score?” is a question that’s become more important in everyone’s financial lives. What many don’t know is how much credit can negatively affect what you pay for homeowners insurance. For the third year, examined the average impact of credit on home insurance rates in all 50 states—and the results are more extreme than ever.

The study found that policyholders with fair credit pay and average of 36% more than those with excellent credit. That’s up from a 32% increase in 2015 and 29% in 2014. What’s more, if you have poor credit rather than excellent credit, your premium more than doubles, increasing an average of 114%.

“Many consumers aren’t even aware that, in most states, credit plays a significant role in determining how much you pay for home insurance,” said Laura Adams, senior insurance analyst, insuranceQuotes. “So, even if you don’t plan on using credit to borrow money, it still affects your finances.”

When credit drops from excellent to poor, these states see the greatest home insurance premium increases:

  1. South Dakota — 288.1%
  2. Arizona — 268.6%
  3. Oklahoma — 248.0%
  4. Nevada — 235.3%
  5. Oregon — 234.9%

These states show the smallest increase (excluding CA, MA and MD, where using credit in setting home insurance rates is prohibited):

  1. North Carolina — 0.2%
  2. Florida — 25.7%
  3. New York — 29.3%
  4. Wyoming — 43.9%
  5. Hawaii — 53.1%

“My advice to consumers is do everything you can to build and maintain excellent credit so you pay less for credit accounts and home and auto insurance,” said Adams. “To maintain good credit make payments on time, keep balances low, and avoid opening many new accounts.”

The full report—which includes state-by-state rankings as well additional important tips and insights for consumers—is available at /home/homeowners-insurance-credit-costs-42617.

Methodology: commissioned Quadrant Information Services to calculate home insurance rates using data from 6 major carriers with approximately 60% market share in each state. The averages are based on a 45-year-old who owns an 1,800 square foot, 2-story, single family home, built in 1976, with $140,000 dwelling coverage, $300,000 liability coverage and a $500 deductible. The three tiers of credit-based insurance scores analyzed were excellent, fair and poor. 

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