What’s the difference between an insurance score and a credit score?

Credit score vs. insurance score

Credit score vs. insurance score

If your credit score has taken a few hits over the years, you may think all is lost when it comes to getting affordable insurance. However, there’s actually a little-known difference in the insurance world when it comes to getting rates or quotes. Finding better insurance premiums truly depends on your insurance score, which is different from your credit score. However, the two are very closely related. Here’s how.

Read moreWhat’s the difference between an insurance score and a credit score?

How to get homeowners insurance with poor credit in Atlanta

Getting home insurance with poor credit can be difficult.

Getting home insurance with poor credit can be difficult.

You may have heard that your credit score has an effect on your home insurance rates. Maybe your score isn’t at its best and you’ve noticed a significant hike in your rates. The realization that this could be hurting your home insurance might make you feel a bit blindsided. You may be silently (or not silently) fuming at the injustice of it all. But fortunately, we have some tips on how to get home insurance with bad credit.

Why does your credit score affect your home insurance rates?

Some insurance companies calculate what’s called an “insurance score” using your credit information. Your insurance score can depend on your outstanding debt and how you’re paying it off, how much credit history you have, if you’ve been on time with paying your bills, and the number of accounts and applications you have.

If you have a good score, you may be able to save money on your home insurance. That’s because insurance companies use these scores to indicate how likely you are to file a claim. The better the score, the lower the risk you’ll file a claim. If you have a poor insurance score, the insurance company may see you as a higher risk. As we said, that could lead to higher insurance rates or difficulties in getting insurance at all.

Now, not all insurance companies calculate an insurance score, but some of them do. It’s one of those things that insurance companies use to evaluate risk.

How to get home insurance with bad credit.

Unfortunately, there is no magic cure that will solve the homeowners insurance and bad credit debacle. However, there are some things that you can do to help get you on your way to getting home insurance at a reasonable rate. Here are our tips:

1. Check your credit report.

This is one way you can improve your score – taking a look at your credit report. Remember, you can request one free report from each of the three major credit-reporting agencies (Equifax, TransUnion, and Experion) once a year. Put on your detective hat, comb through your report thoroughly, and see if you can spot anything that could help you improve your credit in the future.

2. Improve your credit score.

Taking steps to improve your score can help you get the home insurance you need. It could also help you get lower home insurance rates – your home insurance premiums could go up the worse your credit score is. Some things you can do to bolster your score are…

  • Pay off your debt. Try to get rid of the debt on your cards.
  • Pay your bills on time. Late payments do not a happy credit score make. Use calendars, phone alerts, or whatever it takes to make sure that you keep up with all of your payments.
  • Set up your payments so that they’re automatic. Find out if there’s a way to set up automatic payments so that your bills are always paid on time.
  • Don’t use your cards so much. Try not to charge so many purchases to your cards.

3. Shop around for home insurance.

Every home insurance company is different, and they’re all comfortable with different levels of risk. They evaluate risk and applications with their own criteria. So, if you don’t find home insurance with the first or second company you try, don’t lose hope. If at first you don’t succeed, try, try again, right? One insurance company is not the same as the next, and it may pay off to keep on looking at different Georgia home insurance companies.

(And remember, Atlanta Insurance can help you shop around for your insurance and help guide you through the process of getting home insurance. You don’t have to be in this alone. We’d love to help.)

So, as you can see, your insurance score can play a huge part in determining your home insurance rates and eligibility. If you’re having trouble getting home insurance and you suspect bad credit could be to blame, check your credit report for errors, take steps to bolster your score, and shop around for home insurance. Don’t despair – not all is lost.

We can help you shop for your home insurance. We can get multiple quotes for home insurance and find the coverage that suits your needs and your budget. All you have to do to get in touch with our team of insurance experts is fill out our quote form or give us a call today.

Sources:

https://www.nytimes.com/2017/05/05/your-money/poor-credit-history-can-affect-homeowners-insurance-rates.html

https://www.investopedia.com/financial-edge/0212/common-things-that-improve-and-lower-credit-scores.aspx

https://www.usatoday.com/story/money/2019/05/09/credit-score-how-boost-your-fico-score-quickly/1142041001/

Can a drop in your credit score hurt your home insurance rates?

Your credit score has an effect on your home insurance rates.

Your credit score has an effect on your home insurance rates.

Everyone knows that filing claims can cause your homeowner rates to go up. But the latest news shows that your bill paying habits (and your credit score) could work against you too.

You probably know that your credit score can affect your mortgage rates, right? The better your credit score, the better the mortgage rate that you can qualify for. But what about your home insurance rates? You might want to hold onto your hat.

The latest reports show that paying your credit card bills late can hurt you when it’s time to renew that home insurance policy next year. While you might wonder what your credit score has to do with your insurance rates, underwriters tend to think it’s pretty important. In fact, the industry will often use a credit-based score to calculate your rates. That means that you level of debt and your late payment history count. Bottom line: paying those credit cards late will hurt you insurance-wise.

How much are late credit card payments costing you?

Are you the type of person that pays your bills on time? Well, that’s good! You’ll be rewarded. But if you struggle to pay your credit cards on time, that’ll be reflected in the rates that you pay annually.

Let’s find out what kind of an effect a drop in your credit score can have on your insurance rates. The latest study from Insurancequotes.com tells us that a drop from an “Excellent” to a “Fair” credit score can cause a 36% increase in your premiums. Yikes! And that’s just the “Fair” rating. What about a “Poor” credit score? Prepare for an average increase of 114% on your premiums. That’s more than twice what people with excellent credit will pay.

Now here’s the scary part. Every insurance company is different and every state is different. Some poor folks wish they were only paying 114% more! Depending on your state, you might be paying a stiffer penalty for your low credit rating.

What about here in Atlanta? Drum roll, please…

The same study from Insurancequotes.com shows us that overall, as far as premiums go, Georgia ranks 22nd out of the 50 states. But Georgia currently has 132% higher rates for people with poor credit than for people with excellent credit. So, for example, a person with excellent credit might have a $1,000.00 homeowner’s premium in Atlanta. His neighbor with poor credit would pay a $2,320 premium for the same house next door.

Improving your credit score can help lower your home insurance premiums.

Wait a second, that doesn’t seem fair!

Well, it might seem that way. Insurance companies and lenders make their decisions based on statistics. Since they’re the ones taking the credit risk, they get to make the rules. They point to the fact that the statistics don’t lie. It seems that a homeowner’s credit history helps to predict the likelihood of filing a claim. However, that doesn’t mean you can’t do something to help yourself.

 

How to get lower home insurance quotes.

Remember, every insurance carrier is different. That means you need to shop around! We encourage you to reach out to an independent agency like Atlanta Insurance to get a few quotes to choose from. Why do we suggest an independent agency? Certain agencies are “captive” agencies. In other words, they only work for one insurance company. On the other hand, an independent agency, like Atlanta Insurance, can provide free quotes from many of the top carriers in the nation. This means you have more quotes to choose from.

So, if your homeowners rates have gone up, it means it’s time to shop. Every dollar you save is a dollar earned that can go towards taking care of your family.

How to clean up your credit score and save some money.

If you want to raise your credit score, there are quite a few things that you can do. Doing this proactively will help you next year when it’s time to renew. Here are a few suggestions to protect your credit beginning now:

1. Set a budget.

A budget is a “four-letter word” for many people, yet setting a budget is the key to taking control of your finances and your credit ratings. Some people use the old-fashioned envelope technique. This means setting up an envelope for each of your monthly expenses. Then you pay the envelopes weekly as you get your paycheck. At the end of the month, each envelope will ideally have the money to pay the bill. This means we need to get tough with ourselves.

2. Make your lunch at home.

It’s amazing how many people buy breakfast, lunch, and coffee every day at work. This could easily add to $500 a month on your credit cards. That’s money that could go towards paying the credit card bills. It may not be glamorous, but eat breakfast at home. Make your coffee at home and put it in a thermos to drink with your brown bag lunch. Remember, saving $500 a month is equivalent to saving $6,000 a year. Now that is glamorous!

3. Pay your bills on time.

This requires self-discipline. If you can, use the auto-pay feature so that you pay on time every month. If you can’t, use “auto debit” then set an alarm on your phone to remind you every month when the bills are due.

4. Stop using credit cards.

Just because you have them doesn’t mean that you have to use them. Pay them off one at a time and stick them in a drawer. If you must use them, set a few family rules. For example, in my home, we don’t put anything on the card unless we can pay it off in full by the end of the month. If you have to carry a balance, keep it minimal.

Paying credit card bills late can hurt your credit score.

5. Consumer credit counseling.

Talk to a credit specialist to set up a plan that will help you to raise your credit score. There’s no shame in asking for some help to figure out your finances.

Some final encouragement.

Nothing worthwhile is ever easy at first. So stay focused on the prize. Raising your credit score could cut your home insurance rates up to 50%. It will also allow you to get lower interest rates on your credit cards and for any future mortgages. This will save you many thousands of dollars over the life of the loan.

Hang in there, Atlanta. Set a budget. Reach out to a consumer credit counselor. Then contact your local Atlanta Insurance agent to get you affordable home insurance quotes to choose from.

If you’d like to get a free quote for your home insurance, let us know! Fill out our quote form or give us a call and we’d be happy to help you build an insurance plan that’s specifically designed for your family.