How Your Credit Score Affects Homeowners Insurance

For people with poor credit, buying a house can be challenging — and expensive. Once you find a lender that’s willing to offer you a mortgage, you’ll probably have a higher interest rate than someone with good credit. And you could also pay significantly more for homeowners insurance.

A NerdWallet rate analysis found that a person with good credit would pay $2,490 per year for homeowners insurance, on average. But in most states, someone with poor credit would see an average premium of $4,290 per year — over 72% more.

Each insurer has its own definitions of “good” and “poor” credit, but they’re generally in line with traditional credit score ranges. A good credit score typically falls between 670 and 739, while below 580 is considered a bad score.

Since the 1990s, insurers have used credit-based insurance scores to help measure how risky someone might be to insure. Companies can use these scores to set your rates or decide whether to sell you a policy at all.

A credit-based insurance score is similar to a traditional credit score but weighted differently. Both scores look at factors such as how much debt you have and whether you’ve made payments on time. Here’s how your insurance score breaks down:

• Payment history (40%).

• Current level of debt (30%).

• Length of credit history (15%).

• Pursuit of new credit (10%).

• Types of credit used (5%).

Insurance companies use your score differently than a mortgage lender or credit card issuer. They're not using your credit history to judge your ability to pay your premiums. Instead, they’re trying to predict how likely you are to file a claim. Studies have shown that those with lower credit-based insurance scores file more claims. A greater chance of claims means a greater risk for the insurance company — and a higher rate for you.

Some consumer advocacy organizations have spoken out against the use of credit in setting insurance rates. A 2025 report found that people with poor credit paid more for home insurance than those in areas of high disaster risk.^[0]

» MORE: The cheapest homeowners insurance

Below you can see how much a poor credit score will affect your home insurance rates in each state. (We didn’t include states where insurers can’t take credit scores into account when pricing policies.)

Rates reflect the average annual cost of homeowners insurance for a policy with $400,000 in dwelling coverage, $300,000 in liability coverage and a $1,000 deductible.

» MORE: How to buy a house with bad credit

Each insurer uses its own formula to set rates, so people with poor credit may pay less with some companies than others. Below are a few major insurers’ average annual rates for homeowners with poor credit.

» MORE: The best homeowners insurance companies

Shop around. The best way to find cheaper insurance is to check rates from multiple companies. You can get home insurance quotes online or ask an independent agent to shop on your behalf. Double-check that each quote has similar coverage amounts and deductibles to ensure a fair comparison.

Improve your credit. In the longer term, improving your credit can save you hundreds of dollars a year on insurance. Paying your bills on time and using less of your available credit can help. So can disputing any errors on your credit report. Learn more about rebuilding your credit.

Ask about discounts. Check with your insurer or agent to make sure you’re getting all the home insurance discounts you’re eligible for. Many carriers offer savings if you bundle multiple policies (such as home and auto). You may also be able to save if you have protective devices such as burglar alarms or smoke detectors.

For more tips, see how to lower your home insurance cost.