Homeowner's Insurance Costs Nearly Twice as Much with Poor Credit

NEW YORK (MainStreet) — Homeowners with poor credit pay 91% more for homeowner's insurance than people with excellent credit, according to insuranceQuotes.com.

People with poor credit pay at least twice as much as people with excellent credit in 37 states and Washington, D.C. West Virginia's 208% increase is the highest in the U.S., followed by Virginia at 186%, Ohio at 185% and Washington, D.C. at 182%.

Homeowners with median credit pay 29% more than those with excellent credit.

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The greatest differences between excellent and median credit were observed in Montana (65%), Washington, D.C. (60%) and Arizona (55%).

"This is another example of why credit is such an important part of your financial life," said Laura Adams, senior analyst at insuranceQuotes.com. "Maintaining a good credit history suggests that you're a less risky customer and can lead to several hundred dollars in annual homeowner's insurance savings."

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Many consumers are not aware that your credit score plays a big factor in the cost of your home insurance. Improving your credit usually takes a minimum of six months to a year, she said.

"Credit is definitely playing a big role in what people are paying in home insurance and can put an additional $600 or more back in your pocket each year," Adams said.

Consumers should obtain a copy of their credit report for free at www.annualcreditreport.com. Mistakes might have been made by creditors and could be lowering your credit score without you knowing it.

"If you have an error, you can get it corrected and start a dispute," she said. "It is pretty easy for the most part."

Three states prohibit insurers from using credit to calculate homeowner's insurance premiums: California, Massachusetts and Maryland. While insurance companies are technically allowed to consider homeowners' credit scores in Florida, insuranceQuotes.com found that credit does not typically affect premiums.