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