Fact or fiction … Credit affects how much you have to pay for home insurance.
You might be surprised to know that if you have poor credit, you’ll pay an average of 100% more for homeowners insurance than if you have excellent credit!
Even if you have median or fair credit, you’ll still pay 32% more to insure your home.
But the rate increase depends on where you live because some states are more credit-sensitive than others.
For instance, coverage when you have median credit costs over 50% more in Montana, Washington DC, Texas, Colorado, and Arizona.
But if you live in California, Florida, Massachusetts, or Maryland, credit is not allowed to be a factor in setting your home insurance rate.
Insurance companies evaluate your credit because studies have shown that consumers with poor credit file more claims, which makes them riskier customers.
To make up for that risk … you guessed it, they charge you more.
So take every step you can to improve your credit.
Here are 3 tips to boost your credit and your finances:
Tip number one: Keep tabs on your credit.
Go through it with a fine-toothed comb, check for errors, and dispute them right away.
Tip number two: Pay your bills on time.
Sending in payments late or getting turned over to a collection agency is one of the worst ways to damage your credit. So stay organized and never let a bill due date fall through the cracks.
Tip number three: Don’t max out credit cards
Never charge more than 20 to 30 percent of a card’s available balance. And try to pay off your balance in full whenever possible.
If you’re like me, there are a million ways you’d rather spend money. So boost your credit over time and also shop and compare rates so you can cut the cost of home insurance.