You got through the process of procuring a mortgage to buy a home. Now, you are wondering why your home insurance agent wants to know your credit score. It may not seem like the two have much in common, but they actually do.
In fact, your credit score can play a significant role in how much you pay for your home insurance policy. Let's take a closer look at why that is.
Why Credit Matters
Home insurance companies invest significant effort into determining how much risk a policyholder represents. The more risk a homeowner is to an insurer, the more likely it is that the insurer will take a financial hit on that client. As a result, that insurer is likely to charge more for coverage.
Credit scores can play a role in these considerations. Research shows those who have a high credit score are less likely to file claims against their home insurance. Those who have a lower score are more likely to file a claim.
Not all insurance companies use credit scores. Some states do not allow for it. However, it is your right to know which data points the insurance company used to determine your costs. As such, you can ask which factors the insurer used in this process.
If you find that your credit score has raised your rates, you can adapt your policy as needed to help keep your costs more manageable.
What You Can Do Now
If your credit score is not as good as you would like it to be, start with these steps:
- Get a copy of your credit report. Check it to make sure it is accurate. Each consumer can obtain one free copy of their credit report from each of the three credit bureaus. You can also access your free report at this site: www.annualcreditreport.com.
- Use a free credit score service to learn how to improve your rates. Look for a company that offers a free credit score without a monthly service fee.
- Work to reduce the amount of debt you have.
- Use credit, but keep balances as low as possible.
- Make payments on time. This is one of the biggest contributing factors to boosting your credit score.
Make sure you're covered. Call Dean Heckle & Hill, Inc. at (704) 847-4438 for an instant Charlotte home insurance quote.