Best Homeowners Insurance for People With Bad Credit (2023)

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Did you know that homeowners insurance for people with bad credit can cost twice as much as what people with good credit pay?

You may not realize it, but your credit score has a definite impact on what your homeowner’s insurance rates will be.

Even worse, if you have an extremely low credit score the cost of insurance may be too high to afford, or not even available through traditional insurers.

Insurance companies use your credit score as an indication of how well you can be counted on to make your payments, so a higher credit score is always going to save you money.

Read through our guide to better understand why finding cheap insurance is such a challenge for folks with poor credit, and for tips on what you can do to improve your credit score, and lower your homeowner’s insurance rates.

Even if you have a bad credit score, enter your ZIP code into our free online tool above to compare quotes for homeowner’s insurance for people with bad credit so you can find the best possible policy.

Can I get homeowners insurance with a bad credit score?

Bad credit is stressful enough on its own. The good news is, even with a bad credit score, you will likely still be able to buy homeowners insurance with bad credit. You can still get quotes for homeowners insurance for people with bad credit from some of the best insurance companies.

However, expect that bad credit to cause your rates to increase substantially.

Usually, credit scores of 650 or higher receive discounts on insurance policies of all types, while scores lower than 650 will result in higher rates or even an application denial.

Your credit score is the result of a mathematical formula that breaks your credit history down into a single number. If you have been slow to pay a debt, or have completely defaulted a time or two on your credit obligations, your credit score will reflect that.

Likewise, if you pay your bills on time, your credit score will increase. Using a credit score to determine your financial trustworthiness has standardized how your credit history can be used by creditors.

See how much homeowners insurance rates with bad credit can increase in the table below.

As you can see from the data, if you have bad credit, you could end up paying almost twice as much for homeowner’s insurance as someone with good credit. The state you live in also impacts your overall rates.

How can you get cheap homeowners insurance with bad credit?

Finding cheap homeowners insurance when you have bad credit feels like an uphill battle. No matter what, expect your rates to be higher than average at least until you’re able to get your credit score back under control.

Fortunately, there are a few things you can do to help keep your rates low. First, shop around for your homeowner’s insurance policy.

You can even get multiple insurance quotes online for free using quote comparison websites.

The best homeowners insurance companies rated for persons with low credit scores change based on where you live and not all companies calculate rates using the same equation.

This means some companies will not increase rates as much as others simply because of your credit score.

If you own any vehicles, consider bundling your homeowner’s policy and your car insurance policy using the same provider for some massive savings.

Read on to learn why your credit score causes your homeowner’s insurance rates to rise, and for some tips about what you can do to find cheap insurance.

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Why does bad credit impact homeowners insurance rates?

Your credit-based insurance score is checked by a homeowners insurance underwriter as part of the application process and is used to determine how reliably you can be expected to make your payments.

Insurance providers believe there is a correlation between your credit score and how likely you are to file a claim. Similarly, the assumption is that folks with good credit are more active and responsible than folks with poor credit.

The thought is that people with higher credit scores are more likely to pay out of pocket for damages since they have no problem making payments.

If you have a lower credit score, you are seen as more likely to file a claim since you don’t have a history of being able to stay on top of payments.

How do insurance companies use your credit score to determine your homeowner’s insurance score?

However, according to the National Association of Insurance Commissioners, your actual credit score and your credit-based insurance score are not the same numbers. Your credit-based insurance score is determined using five major factors:

• Payment history
• Outstanding debt
• Credit history length
• The pursuit of new credit
• Credit mix

Remember, your credit score can be improved, and it is the only one-factor insurers use when calculating your rates.

Your credit score is used to determine how financially stable you are. This is then used to calculate your insurance score, which tells companies if you are a good risk.

If you’ve had a lot of missed payments or only have one or two accounts open, the insurance company will hesitate to offer you the best rates out there.

Can you get homeowners insurance without a credit check?

In truth, no credit check homeowners insurance is incredibly difficult to find. Most major providers will not be willing to skip your credit check.

In fact, experts estimate that as much as 85% of insurers do credit checks during the underwriting process. However, you can use a homeowners insurance calculator without personal information being given.

However, some states actually ban using credit scores as a means for determining insurance rates. In these states, you’ll have a lot of options for homeowner’s insurance that does not check credit.

According to the Insurance Information Institute, if you live in California or Maryland your credit score cannot legally be used during the underwriting process.

In Massachusetts, while it is technically not banned, regulators will not approve of the use of credit scores for auto and homeowner’s insurance filings. Therefore, you will have no problem securing homeowner’s insurance with no credit check.

Otherwise, you should always anticipate that the insurer will check your credit history.

What’s the difference between traditional homeowners insurance coverage and high-risk insurance?

If your credit score is too low and if insurers believe you’ve filed too many claims against your existing policies, you may not be able to get homeowner’s insurance quotes through traditional companies.

However, home insurance may be a requirement of your mortgage, so instead of being completely locked out by bad credit, you may have to purchase it through a high-risk insurer.

This will not change the coverage of the policy, but it could mean paying rates at a much higher rate than average. Read our tips for cheap home insurance for some help in finding a policy. 

How can I improve my credit score to get cheaper homeowners insurance rates?

Changing your credit score takes time, which means you may not have any choice other than to pay inflated rates for a while.

But, fortunately, your credit score can eventually improve. As it does, you’ll be able to qualify for much better homeowner’s insurance rates.

Try the following tips to help you start on your journey towards better credit:

• Make your monthly payments on time. Making on-time payments proves you are responsible and reliable and will increase your overall credit score.
• Reduce your credit card debt. The goal should be to not owe more than your credit limit, otherwise, your credit score will not improve.
• Avoid unnecessary new credit. Unless it’s necessary, do not open any new credit cards. When you apply for credit, the lender will perform a hard inquiry on your credit reports, which could decrease your credit score by a few points.
• Dispute inaccurate credit information. Review your credit history and look for errors or evidence of identity theft. Monitor your credit history regularly.
• Keep old credit card accounts open. If you have old credit cards that are paid off and you no longer use them, keep the account open. The positive history will help improve your credit score over time.

If you discover a problem while reviewing your credit history, make sure you report it to all three major credit bureaus along with any documentation you can provide to demonstrate why the filing was not legitimate.

If you are having serious financial troubles, enlist the services of a financial advisor who can help you arrange your budget and get your bills back under control.

You are now an expert on securing affordable homeowners insurance for people with bad credit. As you’ve learned, it is possible to find affordable homeowners insurance for bad credit people, it just takes a little more time and effort.

Some companies care about credit scores more than others. So always shop around and compare quotes from multiple companies so you know you’re getting the best rates.

In the meantime, keep working towards improving your credit score. Soon enough, you’ll be eligible for much better rates. Which home insurance company for people with bad credit is right for you?

If you have bad credit, don’t wait to start comparing homeowners insurance rates. Enter your ZIP code into our free quote tool below to get started finding affordable rates for homeowners insurance for people with bad credit now.

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