Learn how your credit score affects your insurance premiums on the insurance blog. If you have problems with your credit, you may not be eligible for some coverages.
Your credit score has a big impact on your homeowners and auto insurance. The way that insurance companies use credit reports is proprietary. While they won't reveal their exact methodologies, you can use your credit score to see how your insurance might be impacted by your credit history.
The range of credit scores in Insurance and Your Credit Score reflect industry standards used by lenders and creditors for determining credit risk. If you have a spotty credit history, including late payments, too much credit or if you're over your credit limits, you may have to pay a higher premium for insurance. You might also be denied insurance coverage, or only get a scaled-down insurance policy, if you have poor credit, with items like collections or judgments on your credit report.
One of the most frequently asked questions I get from readers is, "Why does my insurance cost so much?" It's hard for me to answer that question. Rates vary by state, company, policy type and item insured. They also can increase if you have problems with your credit score.
If you are turned down for insurance due to your credit history, by law you can order a free copy of your credit report. The insurance company won't tell you what they found on your credit report. But chances are if that's the reason for being denied insurance, you're already aware of problems with your credit score.
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