Does credit score affect homeowners insurance?

Does my credit score affect my home insurance?

Although home insurance companies in most states can consider your credit history to determine rates, your credit score doesn’t affect home insurance rates directly. Instead, insurers use your credit history to generate a credit-based insurance score. These scores incorporate details from your credit report and may include other information.

Policyholders with higher credit-based insurance scores might be more likely to pay on time and avoid lapses in coverage. They might also have the resources available to maintain their homes, which could lessen the likelihood of needing to file a claim. To compensate for the higher risk of claims and lapses, insurance companies tend to charge higher premiums for policyholders with lower credit-based insurance scores.

As of 2025, only a few states have banned the use of credit as a rating factor for home insurance. If you live in California, Maryland or Massachusetts, your insurance company is restricted from using your credit history to rate your policy or deny you coverage. In Michigan and Oregon, state law places some restrictions on insurers’ ability to use credit information when issuing and managing policies, but it’s permissible in certain contexts.

FICO credit scores vs. credit-based insurance scores

Credit-based insurance scores differ from the everyday FICO score that’s considered for loans and credit card approvals. Essentially, credit scores are used to determine how much money you make and how able you would be to pay back a loan amount. Your credit-based insurance score, on the other hand, measures how likely it is you’ll file an insurance claim. 

An insurance company looks at most of the same factors that FICO does to calculate your credit score to calculate your credit-based insurance score. The real difference lies in how each factor is weighed. Credit-based insurance scores are calculated differently across different home insurance companies, but in general, you can expect the following items (and their associated weights) to factor into the equation:

• Payment history (40 percent): Looks at how you’ve made payments on your current and previous debt
• Outstanding debt (30 percent): Amount of debt you currently have
• Credit history length (15 percent): Measures how long you’ve had a line of credit
• Pursuit of new credit (10 percent): Looks at the number of new credit accounts you’ve opened 
• Credit mix (5 percent): Looks at the types of credit you have through credit cards, mortgages, auto loans, etc.

A FICO credit score usually places less emphasis on your payment history and credit mix, but new credit could be more important. However, like with a FICO Score, the following personal information is not assessed in your credit-based insurance score:

• Race 
• Gender 
• Religion
• Age
• Martial status 
• Income 
• Occupation 

How does credit impact home insurance premiums?

Typically, the higher your credit rating, the less you will pay for home insurance in the states where credit is considered a rating factor. Although it is only one factor in setting rates for home insurance, data shows that the credit-based insurance score is an important one. The chart below highlights the national average annual home insurance rates based on four credit tiers.

While these credit tiers don’t translate directly to credit-based insurance scores, they’re a good metric for analyzing how credit affects home insurance premiums. Because every company uses its own scoring metric to determine credit-based insurance scores, there is no standardized data available. In other words, it’s hard to nail down exactly how much credit score affects homeowners insurance, but the following credit tier data offers an idea of how rates are impacted on average.

Note that the rates don’t vary dramatically between average, good and excellent scores. However, it’s often more difficult to find affordable home insurance with bad credit — that is, a score below 500. As the table shows, someone with a poor credit score pays 77 percent more for home insurance, on average, than someone with an excellent score.

Credit tier rates by insurance company

Home insurance companies not only calculate credit-based insurance scores differently, but it could hold more weight with one insurance company than another. Average, good and excellent credit scores don’t usually generate significantly different rates. Home insurance for bad credit, however, typically comes with much higher rates. But just how much homeowners with bad credit are penalized by an insurance company will vary.

Can I get homeowners insurance with bad credit?

If you have bad credit, homeowners insurance is still attainable, but it may be more expensive. As poor credit may lead to higher premiums, shopping around and comparing quotes may help you find affordable rates. Some companies may not weigh credit history as heavily as others when determining premiums.

An ultra-low credit-based insurance score could be a major red flag to an insurance company and make it difficult to find a company that agrees to write you a policy. If credit is holding you back from securing a home insurance policy, you may need to seek insurance through your state’s Fair Access to Insurance Requirements (FAIR) plan. These plans are designed to insure high-risk individuals who can’t find coverage within the standard insurance market. While FAIR plans may be great to have as a last resort, coverage is often limited and relatively expensive.

Can you boost your credit to lower your home insurance rates?

If you have poor credit and live in a state that permits insurers to use your credit history as a rating factor, improving your credit could potentially lower your home insurance rates. The same may also be true for individuals with average or good credit, although the impact on rates might be considerably smaller. Consider the following strategies as a starting point for your credit-building journey:

• Understand your credit history: Identifying factors that are negatively impacting your credit is likely the first step to improving your credit rating. If you’re unsure of why your score is low, you may need to request a full credit report. This can be done for free through the main credit reporting bureaus.
• Pay bills on time: Avoiding late payments will likely improve your credit score over time. When possible, it may be helpful to pay certain bills as a lump sum up front to avoid needing to keep up with monthly payments.
• Use credit responsibly: Keeping your credit utilization ratio low may help improve your score. It’s generally recommended to shoot for a credit utilization ratio of no higher than 30 percent. For instance, if you have $10,000 of available credit, you want to use no more than about $3,000 at once. 
• Limit hard credit checks: Hard credit checks are performed when you apply for a credit card or loan. Having frequent hard credit checks may negatively impact your credit score. 
• Avoid closing accounts: It might sound counterintuitive, but keeping unused accounts open could be good for your credit score. Length of credit history is one determining factor when it comes to your score, so you want at least a few long-term accounts on your record.

Taking these steps likely won’t drop your premium overnight, but if you are able to improve and maintain a higher credit rating, your credit-based insurance score might also improve, which could lower your rates. If you have recently improved your credit, it may benefit you to get a few insurance quotes to see if you can find a lower rate.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze April 2025 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on married male and female homeowners with a clean claim history, good credit and the following coverage limits:

• Coverage A, Dwelling: $300,000
• Coverage B, Other Structures: $30,000
• Coverage C, Personal Property: $150,000
• Coverage D, Loss of Use: $60,000
• Coverage E, Liability: $500,000
• Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible, a $500 hail deductible and a 2 percent hurricane deductible (or the next closest deductible amounts that are available) where separate deductibles apply.

These are sample rates and should be used for comparative purposes only. Your quotes will differ.

Credit: Rates were calculated based on the following insurance credit tiers assigned to our homeowners: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining home insurance rates: California, Maryland, Massachusetts.