For better or worse, credit scores are used as a determining factor in pretty much every financial transaction you’ll engage in, from applying for a credit card to buying a car to purchasing a home. When it comes to smaller amounts, paying a higher interest rate because of poor or bad credit might not mean much, but when it comes to a major purchase like a home, a few credit score points could mean a slightly higher rate, which will likely add up to thousands of dollars in interest over the life of the loan.
Anyone who’s gone through the process of buying a home knows that the purchase price is only the beginning -- the extra expenses mount up fast. And one of the expenses that may be more than you were expecting can be your homeowners insurance. On average, homeowners insurance adds an extra $100 or so to your monthly homeownership expenses. But in addition to that, you could be paying higher insurance premiums just because your credit score isn’t that great.
According to a recent survey, a U.S. homeowner could expect to pay 32% more in annual homeowners insurance premiums if they have what’s considered fair credit, instead of good or excellent credit. In some instances, your homeowners insurance can cost twice as much as it would if you had excellent credit.
Most U.S. states allow insurance companies to consider credit history, not just a raw credit score, when determining home insurance rates. Maryland, California, and Massachusetts do not.
To find out more about how your credit score can affect your rates, contact J.K. Olivieri today!
J.K. Olivieri Insurance Agency, Inc. is an independent insurance agency founded in 1979 which represents a number of major insurance companies. Our mission is to protect our clients’ financial future. We feel our role as an insurance agency is to assist our clients in selecting the best possible programs to fill their specific needs. In doing so, we shall research and present our clients with the best possible programs available at the best possible prices.