Getting Home Insurance With Bad Credit

If you have bad credit, your home insurance costs are likely much higher than those with good credit. Learning more about how companies use your credit score to determine your premiums can give you insight into the process and ways to lower your insurance costs.

Generally, insurance companies use your credit-based insurance (CBI) score to determine your rates. While models used to calculate someone’s CBI vary by insurance company and are proprietary, some known factors affect it. 

Factors that can produce a high (good) CBI score are:

• Low credit usage
• Good payment history without late payments
• A mix of credit accounts in good standing
• Long credit history

If a home insurance credit check comes back with these factors, you could receive a low (bad) CBI score and pay more for coverage:

• Collections on accounts
• Late payment history
• High credit usage
• Multiple recent credit applications

Your credit score greatly affects what you pay for insurance. Based on your home insurance credit check, you might pay hundreds more yearly for homeowners coverage. For example, the average annual cost of home insurance is $2,614 yearly for a policy with $250,000 in dwelling coverage. Someone with bad credit pays about $7,051 yearly.

Research shows people with poor money management habits tend to file more claims. Insurance companies rarely deny coverage for bad credit. Instead, they charge higher rates to account for the increased risk.

American Family is the cheapest home insurance company for people with bad credit. A policy with $250K in dwelling coverage costs an average of $3,365 annually. Use the table below to compare rates from different providers. Filter by coverage to check the cheapest for other coverage limits.

Getting home insurance with bad credit is possible in all states, though finding cheap homeowners insurance can be challenging. Shop around and compare quotes to find the most affordable options. The calculator below gives accurate estimates based on your needs and profile.

Lenders use FICO scores to determine if you qualify for credit and at what interest rate. Insurance companies use CBI scores to determine how likely you are to file a claim. While your FICO score is readily available, CBI scores aren't public.

Paying bills on time and reducing your debt and credit inquiries can improve your FICO and CBI scores. Improving these scores increases your chances of getting cheaper insurance premiums and better credit card and loan terms.

You can get home insurance without a credit check, but it's only guaranteed in California, Maryland or Massachusetts. Finding companies that skip credit checks in other states is difficult.

While getting a quote without a credit check is challenging, insurers rarely deny coverage because of poor credit. However, expect significantly higher rates if your credit score is low.

Your credit score is just one factor that determines insurance rates, along with claims history, home age, appliances and other criteria.

MoneyGeek explored how to find the cheapest homeowners insurance for people with low credit scores and how to get coverage without a credit check. While American Family offers the lowest average premium, the most affordable option for you may differ.

To help you find an affordable provider, MoneyGeek answered common questions about getting homeowners insurance with bad credit.

Why Trust MoneyGeek? 

MoneyGeek analyzed quotes from multiple insurance providers across the U.S. using a profile that reflects the average homeowner. By considering different locations and companies, we aim to give a reliable estimate of what homeowners can expect to pay, showing why comparing rates matters.

Methodology

MoneyGeek evaluated homeowners insurance carriers using insights and premiums from Quadrant Information Services' official databases.

Homeowner Profile

For our analysis, we created a sample homeowner profile with these characteristics:

• Good credit score (769 to 792)
• Home built in 2000
• Wood-frame construction
• Composite shingle roof

Homeowners Insurance Coverage Details

Unless specified otherwise, we used these coverage limits to collect quotes:

• $250K in dwelling coverage
• $125K in personal property coverage
• $200K in personal liability coverage
• $1K deductible

We also gathered data for policies with broader coverage to find the best companies for insuring expensive homes, increasing limits to $1M in dwelling coverage, $500K in personal property coverage and $1M in liability coverage.