Your credit-based insurance score is one of the biggest factors in what you pay. See how much improving your score could save — or what poor credit is costing you.
Insurance companies use a credit-based insurance score — similar to but distinct from your FICO score — to predict the likelihood you'll file a claim. Statistical studies consistently show that policyholders with lower credit scores file more claims, and insurers price accordingly.
The impact is substantial. A homeowner with poor credit (below 600) may pay 40-75% more than someone with excellent credit for identical coverage on the same home. For auto insurance, the gap can be even wider — up to 65-100% more in some states.
A handful of states restrict or ban this practice. California, Massachusetts, and Hawaii are the most protective, prohibiting credit-based pricing for auto insurance. California and Maryland also restrict it for homeowners insurance. If you live in one of these states, your credit score won't affect your premium.
To improve your insurance score: pay bills on time, keep credit card balances below 30% of limits, avoid opening many new accounts, and maintain a long credit history. Most improvements take 6-12 months to show up in insurance quotes. When shopping for insurance, always ask if the insurer uses credit-based pricing and whether you qualify for any credit improvement programs.
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