Credit Scores and Homeowners Insurance – How are They Connected?

Good Bad Credit Signpost Showing Customer Financial RatingHaving a high credit score can help to benefit you in many ways. From buying a car to getting approved for a credit card, your credit score is used in a variety of situations. Many people are not aware that your credit score can also impact the cost of your homeowners’ insurance premiums.

When you are looking for a homeowners’ insurance policy to provide the right amount of protection for your home, your insurance agent will run a credit check. It is important to keep in mind that insurers will only run a “soft” credit check, which will not show as an inquiry on your credit report. Since there are no consequences of running a “soft” credit check, you can shop around for the right insurance policy without having to worry about ruining your credit.

Once insurers know your credit score, they use it in combination with many other factors to come up with an insurance score. This insurance score is then used to decide how much of a risk you are, which will then be reflected in your insurance premiums. The more of a risk you are, the higher your insurance premiums will be. If you have a high insurance score, you will be able to save on your insurance premiums since it means that you are not at high-risk.

Many studies have shown that people with higher credit scores are less likely to file an insurance claim, which is why they are considered less risky, and are rewarded with lower insurance premiums.

For all of your homeowners’ insurance needs, contact The Insurance Shop in White Bear Lake, Minnesota. We will work with you, no matter your credit score to ensure that you have the most comprehensive homeowners insurance policy possible.