May 4th, 2017 9:30 AM by Jackie A. Graves, President
Your homeowner's insurance rate can be hurt by a bunch of
things — even
something as simple as paying your credit card bill late can do serious damage.
That's because underwriters use
a credit-based insurance score to set your premium, which looks at things like
debt and late payments, among other
"It's not intuitive that
how I handle my credit card can affect things like my auto or home
insurance," Peter Kochenburger, deputy director of the University of
Connecticut's Insurance Law Center, told CNBC.
A study from InsuranceQuotes.com found that having a credit score in
the middle of the pack can result in rates that are an average 36 percent
higher than the amount people with excellent scores pay.
It's even more dramatic when
you look at the difference between those with poor versus excellent credit —
premiums can be a whopping 114 percent higher on average.
The impact of credit scores on
your homeowner's insurance rate also differs from state to state. (see charts).
Experts say this is another
reason why it's smart to
shop around for homeowners insurance.
Robert Hunter, director of
insurance at the Consumer Federation of America, said it's a good idea to do
some homework when looking for coverage.
"Insurers don't always use
the same methodology in utilizing credit scores, and it pays to shop around,
ask an insurance agent, or also talk to your state insurance department about
the use of credit scores," Kochenburger said.
Purchasing your home and auto
insurance from the same insurer may help get you a 5 percent to 15 percent
discount on your premium, said Loretta Worters, vice president of media
relations at the Insurance Information Institute.
"To protect your credit,
pay bills on time, don't obtain more credit than you need and keep your credit
balances as low as possible," she said.
Worters noted that if you live
in an area that has a lot of crime, improving your home security could help
your rates — though not all systems are eligible for a discount and many are
expensive, so double check if it qualifies before you invest.
"Credit reports can have
errors, and correcting those is often the "quickest and most
straightforward thing you can do," Kochenburger said.
By Natalia Wojcik - To view the original article click here