Does Poor Credit History Affect Homeowner’s Insurance Rates?

Credit history is a very important aspect in availing loans and other financial benefits. Credit history should be strong for every individual who needs a loan for many reasons. Banks and other financial institutions analyses the profile of the person based on the credit history he holds. When you avail a home loan you need to take insurance for your home in case of any unforeseen events. This covers the risk for the homeowner as well as the bank that finances the home. The interest rates of homeowner’s insurance are directly dependent on the credit history of the person.

If the credit history is poor the homeowner’s insurance rate will almost double making the premium amount to shoot up. A person with an excellent credit history will fetch average or even below average interest rates making them safe from higher premium rates. The research has shown that a person with lesser credit history will pay around 36% more premium as compared to a person with a good credit score. Homeowners interest rates depend on many factors such as the age of the home, the quality of the home and the resistance to other factors such as firefighting. Interest rates are calculated differently by different companies. This has made the life of the homeowners difficult when they try to take an insurance for their homes.

How do you get a good credit score?
You can maintain your credit score by doing a few things on a regular basis. All your bill payments for electricity, loans, credit cards and many such other payments should be paid on time. This will give you a good credit score and will maintain your position in the market. If you wish to avail the homeowner’s interest rates at a lower rate, then try out numerous insurance companies as each has a different approach to the calculation of the credit score. You may get a good rate at some or the other company despite having a bad credit score. Also, you can make a good credit history by doing a few changes to your payments and making them on time to reduce your liability and then ask them to validate your credit history. This will make your credit score to better up and give you lower interest rates for your home insurance.

Why does credit score affect the homeowner’s insurance?
A credit score is the potential to make payments to your liabilities and it should be on a higher end to show that you have a good financial background and can manage to make payments if required. It also affects many other things such as buying a new credit card and the limit that will be decided for it. All such things depend on the credit history of the individual. When you need a loan, this credit score and history is checked so that you can avail the loan without much difficulty at a lesser rate and with a good amount. Therefore, it is important for you to be updated with your payments on or before the due date.

A credit score plays a vital role for the banks to determine the credibility of a customer. If someone has a good credit score, it implies that the person has been paying all the bills on time. This gives a sense of security to the banking and financial institutions to trust the person opting for home loans. Higher the credit score, lesser the interest rates; lower the credit score, higher the interest rates.

After the US being too particular about the credit ratings, India has gotten too serious about the credit scores. Why wouldn’t it be? This score is needed in every aspect of purchasing. Banks take it too seriously if you have a bad credit score. Wise people will ensure that the credit rating is always more than required for a better credibility.

Tips for a better credit score
•Always keep a To do list and never miss the deadline of your due date
•Don’t rely on too many loans for your living
•Try to manage with the little you have. If you opt for too many loans at a time, you might falter in paying the dues every month. Loans can be luring but dangerous if not paid

Trying these few tips, you may be able to have better credit score so that interest rates that are lower can be enjoyed by homeowners.