Homeowners Insurance for People With Bad Credit

Homeowners insurance for people with bad credit averages $123 a month nationally. Over time, you can improve your credit score and qualify for lower rates by making any monthly payments on time, avoiding unnecessary credit, and reducing your current debt. You can still find affordable rates for homeowners insurance with bad credit by comparing quotes from different providers and bundling policies. You can find cheap homeowners insurance with bad credit right here for free.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Nov 24, 2020

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The Rundown

  • People with bad credit should expect to pay almost twice as much for homeowner’s insurance as people with good credit.
  • If you have poor credit, compare quotes from multiple companies and consider bundling your homeowner’s insurance with another policy for cheaper rates.
  • Over time, you can improve your credit score and qualify for better homeowner’s insurance rates by making your monthly payments on time, paying off any outstanding debt, and disputing inaccurate credit information.

Did you know that homeowners insurance for people with bad credit can cost twice as much as what people with good credit pay?

You may not realize it, but your credit score has a definite impact on what your homeowner’s 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 make your payments, so a higher credit score is always going to save you money.

Read through our guide to better understand why finding cheap insurance is such a challenge for folks with poor credit, and for tips on what you can do to improve your credit score, and lower your homeowner’s insurance rates.

Even if you have a bad credit score, enter your ZIP into our free online tool above to compare quotes for homeowner’s insurance with bad credit so you can find the best possible policy.

Getting Homeowners Insurance with a Bad Credit Score

Bad credit is stressful enough on its own. The good news is, even with a bad credit score, you will likely still be be able to buy homeowners insurance with bad credit. You can still get quotes for homeowners insurance for people with bad credit from some of the best insurance companies.

However, expect that bad credit to cause your rates to increase substantially.

Usually, credit scores of 650 or higher receive discounts on insurance policies of all types, while scores lower than 650 will result in higher rates or even an application denial.

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 that.

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.

See how much homewoners insurance rates with bad credit can increase in the table below.

Average Annual Homeowners Insurance Rates by Credit History
StateAverage Annual Homeowners Insurance Rates with Good CreditAverage Annual Homeowners Insurance Rates with Bad Credit
Alabama$1,433$1,748
Alaska$959$1,170
Arizona$825$1,007
Arkansas$1,373$1,675
California$1,008$1,230
Colorado$1,495$1,824
Connecticut$1,479$1,804
Delaware$833$1,016
District of Columbia$1,235$1,507
Florida$1,951$2,380
Georgia$1,267$1,546
Hawaii$1,102$1,344
Idaho$730$891
Illinois$1,056$1,288
Indiana$1,000$1,220
Iowa$964$1,176
Kansas$1,584$1,932
Kentucky$1,109$1,353
Lousiana$1,968$2,401
Maine$882$1,076
Maryland$1,037$1,265
Massachusetts$1,488$1,815
Michigan$942$1,149
Minnesota$1,348$1,645
Mississippi$1,537$1,875
Missouri$1,285$1,568
Montana$1,174$1,432
Nebraska$1,481$1,807
Nevada$755$921
New Hampshire$972$1,186
New Jersey$1,192$1,454
New Mexico$1,017$1,241
New York$1,309$1,597
North Carolina$1,086$1,325
North Dakota$1,253$1,529
Ohio$862$1,052
Oklahoma$1,885$2,300
Oregon$677$826
Pennsylvania$931$1,136
Rhode Island$1,551$1,892
South Carolina$1,269$1,548
South Dakota$1,202$1,466
Tennessee$1,196$1,459
Texas$1,893$2,309
Utah$692$844
Vermont$918$1,120
Virginia$999$1,219
Washington$854$1,042
West Virginia$940$1,147
Wisconsin$779$950
Wyoming$1,156$1,410
Countrywide$1,211$1,477
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As you can see from the data, if you have bad credit, you could end up paying almost twice as much for homeowner’s insurance than someone with good credit. The state you live in also impacts your overall rates.

How can you get cheap homeowners insurance with bad credit?

Finding cheap homeowners insurance when you have bad credit feels like an uphill battle. No matter what, expect your rates to be higher than average at least until you’re able to get your credit score back under control.

Fortunately, there are a few things you can do to help keep your rates low. First, shop around for your homeowner’s insurance policy.

You can even get multiple insurance quotes online for free using quote comparison websites.

The best homeowners insurance companies for persons with low credit scores change based on where you live and not all companies calculate rates using the same equation.

This means some companies will not increase rates as much as others simply because of your credit score.

If you own any vehicles, consider bundling your homeowners policy and your auto insurance policy using the same provider for some massive savings.

Read on to learn why your credit score causes your homeowners insurance rates to rise, and for some tips about what you can do to find cheap insurance.

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Why Bad Credit Impacts Homeowners Insurance Rates

Your credit-based insurance score is checked by a homeowners insurance underwriter as part of the application process and is used to determine how reliably you can be expected to make your payments.

Insurance providers believe there is a correlation between your credit score and how likely you are to file a claim. Similarly, the assumption is that folks with good credit are more active and responsible than folks with poor credit.

The thought is that people with higher credit scores are more likely to pay out of pocket for damages since they have no problem making payments.

If you have a lower credit score, you are seen as more likely to file a claim since you don’t have a history of being able to stay on top of payments.

How do insurance companies use your credit score to determine your homeowners insurance score?

However, according to the National Association of Insurance Commissioners, your actual credit score and your credit-based insurance score are not the same numbers. Your credit-based insurance score is determined using five major factors:

  • Payment history
  • Outstanding debt
  • Credit history length
  • The pursuit of new credit
  • Credit mix

Remember, your credit score can be improved, and it is only one factor insurers use when calculating your rates.

Your credit score is used to determine how financially stable you are. This is then used to calculate your insurance score, which tells companies if you are a good risk.

If you’ve had a lot of missed payments or only have one or two accounts open, the insurance company will hesitate to offer you the best rates out there.

Can you get homeowners insurance without a credit check?

In truth, no credit check homeowners insurance is incredibly difficult to find. Most major providers will not be willing to skip your credit check.

In fact, experts estimate that as much as 85% of insurers do credit checks during the underwriting process.

However, some states actually ban using credit scores as a means for determining insurance rates. In these states, you’ll have a lot of options for homeowner’s insurance that does not check credit.

According to the Insurance Information Institute, if you live in California or Maryland your credit score cannot legally be used during the underwriting process.

In Massachusetts, while it is technically not banned, regulators will not approve of the use of credit scores for auto and homeowner’s insurance filings. Therefore, you will have no problem securing homeowner’s insurance with no credit check.

Otherwise, you should always anticipate that the insurer will check your credit history.

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What’s the difference between traditional homeowners insurance coverage and high-risk insurance?

If your credit score is too low and if insurers believe you’ve filed too many claims against your existing policies, you may not be able to get homeowner’s insurance quotes through traditional companies.

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 rates at a much higher rate than average.

Ways to Improve your Credit Score to get Cheaper Homeowners Insurance Rates

Changing your credit score takes time, which means you may not have any choice other than to pay inflated rates for a while.

But, fortunately, your credit score can eventually improve. As it does, you’ll be able to qualify for much better homeowner’s insurance rates.

Try the following tips to help you start on your journey towards better credit:

  • Make your monthly payments on time. Making on-time payments proves you are responsible and reliable and will increase your overall credit score.
  • Reduce your credit card debt. The goal should be to not owe more than your credit limit, otherwise, your credit score will not improve.
  • Avoid unnecessary new credit. Unless it’s absolutely necessary, do not open any new credit cards. When you apply for credit, the lender will perform a hard inquiry on your credit reports, which could decrease your credit score by a few points.
  • Dispute inaccurate credit information. Review your credit history and look for errors or evidence of identity theft. Monitor your credit history regularly.
  • Keep old credit card accounts open. If you have old credit cards that are paid off and you no longer use them, keep the account open. The positive history will help improve your credit score over time.

If you discover a problem while reviewing your credit history, make sure you report it to all three major credit bureaus along with any documentation you can provide to demonstrate why the filing was not legitimate.

If you are having serious financial troubles, enlist the services of a financial advisor who can help you arrange your budget and get your bills back under control.

You are now an expert on securing affordable homeowners insurance for people with bad credit. As you’ve learned, it is possible to find affordable homeowners insurance for bad credit people, it just takes a little more time and effort.

Some companies care about credit scores more than others. So always shop around and compare quotes from multiple companies so you know you’re getting the best rates.

In the meantime, keep working towards improving your credit score. Soon enough, you’ll be eligible for much better rates. Which home insurance company for people with bad credit is right for you?

If you have bad credit, don’t wait to start comparing homeowners insurance rates. Enter your ZIP into our free quote tool below to get started finding rates for homeowners insurance for people with bad credit now.

References:

  1. https://content.naic.org/article/consumer_insight_creditbased_insurance_scores_arent_same_credit_score_understand_how_credit_and_other_factors.htm
  2. https://www.iii.org/article/background-on-credit-scoring

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