If you own a home, you may already know how important a role your credit score plays in your finances. That’s because it’s something companies use to rate your creditworthiness and determine just how big of a risk it is to lend money to you. Credit reports can paint a picture of your spending habits, whether you pay your debts on time, and so much more.
And while homeowners in particular may be used to being judged by these scores—you need to have a certain score to qualify for a home loan in the first place—they may be surprised to learn that in some areas, credit scores are being used for other purposes.
Take Florida, for example. Some homeowners in the Sunshine State say that their credit scores are being used to determine how much money they are paying for their homeowners insurance (HOI). According to Fox 29, this applies to existing policies, and it’s catching some folks off guard.
As such, some homeowners say they are being asked to pay a higher premium for their HOI due to their credit score. Some are even writing in to the Fox outlet to ask, “What gives?”
HOI Premiums Are Being Influenced by Credit Scores
A homeowner wrote into Fox 29 to share how his HOI company reached out to him to let him know his premium would be going up after it reviewed his credit. “They are raising my premium again; this time they are raising because of a LexisNexis rating in my credit report,” Todd in Palm Beach County wrote in an email to the outlet.
But according to Robert Norberg with Arden Insurance, HOI companies have access to so much more information now, thanks to what is shown on these reports, and they are using it as one of the tools that determine how big of a risk you are.
In this case, it sounds like more risk equals higher premiums, which isn’t good news for cash-strapped Floridians who already pay a high premium for their HOI coverage thanks to the state’s hurricane risk.
You Can Take Steps to Lower Your HOI Premiums
Having a lower credit score makes things more expensive for people, since those with higher scores typically get better interest rates, financing offers, and now… insurance premiums. However, Liberty Mutual says that there are options for those who are looking to lower their HOI premiums, which could come in handy for some Florida homeowners.
First, the website says you should always rate shop to make sure you’re getting the best deal. Then, once you find a good option, you should see if there are deals for bundling your policies (like using the same company for both home and auto coverage). Some home improvements can lower your premiums as well.
Obviously, nobody wants to pay more than they have to for anything, but finding out that you’re being charged more for the same policy your neighbor has definitely stings. Hopefully some of these tips will help the homeowners who wrote into Fox 29 so they can find a way to make their HOI premiums more affordable.