You may not realize it, but your credit score has a definite impact on what your homeowners insurance rates will be. Even worse, if you have an extremely low credit score the cost of insurance may be too high to afford, or not even available through traditional insurers. Insurance companies use your credit score as an indication of how well you can be counted on to pay your premiums, so a higher credit score is always going to save you money.

What is Your Credit Score?
Your credit score is the result of a mathematical formula that breaks your credit history down into a single number. If you have been slow to pay a debt, or have completely defaulted a time or two on your credit obligations, your credit score will reflect it. Likewise, if you pay your bills on time, your credit score will increase. Using a credit score to determine your financial trustworthiness has standardized how your credit history can be used by creditors.

Insurance Companies and Credit Scores
Your credit score is checked as part of the application process and used to determine how reliably you can be expected to make your premium payments. Credit scores of 650 or higher will receive discounts on insurance policies of all types, while scores lower than 650 will result in higher premiums or application denial.

Traditional Coverage vs. High Risk Insurance
If your credit score is too low, or you have filed “too many” claims against your existing policies, you may not be able to get homeowners insurance quotes through traditional carriers. However, home insurance may be a requirement of your mortgage, so instead of being completely locked out by bad credit you may have to purchase it through a high risk insurer. This will not change the coverage of the policy, but it could mean paying premiums much higher than you would pay with a higher credit score.

Improving Your Credit Score
Making changes to your credit score takes time, so you may not have any choice other than to pay inflated premiums for a while, but you can begin the credit improvement process today to help you save money in the future. Start by reviewing your credit history looking for errors or evidence of identity theft, and continue to monitor your credit history regularly. When a problem is discovered, report it to all three major credit bureaus along with any documentation you can provide to demonstrate why the filing is not legitimate. If you are having serious financial troubles, enlist the services of a financial advisor who can help you arrange your budget to get your bills back under control.

About the Author: is a writer for US Insurance Agents. She works hard to help provide a fresh perpsective to insurance, personal finance and related topics. Google+