Poor credit costs when buying homeowner's insurance
Consumers with excellent credit pay half as much to insure their homes as those with lousy credit, according to a report released on Monday by BankRate subsidiary insuranceQuotes.com.
In at least 38 states and Washington, D.C., those with poor credit pay more than double what those with top credit ratings do, the study found. In West Virginia, which has the biggest spread of prices in the nation, those with poor credit pay as much as 202 percent more than those with sterling credit ratings. That's followed by Washington, D.C. (185 percent), Ohio (185 percent) and Montana (179 percent).
"In most states, insurers are putting more emphasis on credit scores this year," Laura Adams, insuranceQuotes.com's senior analyst said in a statement. "The impact of a poor credit score is higher now than it was last year in 29 states and Washington, D.C., while it is lower in just 17 states."
The message is obvious. Allowing your credit score to creep downward is going to be hurt financially, and not just for getting loans or credit cards.
"It's more important than ever for people to maintain a solid credit rating by paying their bills on time, keeping their balances low and correcting errors on their credit reports," Adams said.
However, consumers in certain states are protected from having their credit used against them in insurance price settings, with California, Massachusetts and Maryland banning the practice. And, the study found, credit scores don't appear to play much of a role in rates set in Florida.
Under federal legislation proposed by earlier this month by Sen. Elizabeth Warren, D-Massachusetts, a person's financial history would not be allowed to come into play in most cases as companies make hiring decisions. The practice is a common one in the United States, with with nearly half of employers checking job applicants' credit record.
Warren and other proponents of the bill argue that a poor credit rating reflects circumstances beyond a person's control, such as unexpected medical costs or unemployment, and not an individual's character or abilities.
