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Homeowners with very low credit scores paid about $550 more per year for home insurance in 2024 than those with very high scores.
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Insurance costs have risen faster for low-credit homeowners, with their insurance burden growing 1.7 percentage points per year since 2020.
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Improving your credit score—or shopping around if your score improves—may help lower what you pay for home insurance.
Many people are aware that your credit score impacts your ability to get a credit card, mortgage, or a loan. But do you know it may also affect what you pay for homeowners insurance?
Insurers often rely on a credit-based insurance score derived from your credit report to help predict risk, and new research shows how much of an impact it can have on your premium.
Your credit score may shape more of your housing costs than you realize. New research from the National Bureau of Economic Research found that U.S. homeowners with the lowest credit scores paid about $550 more per year for home insurance than those with the highest scores for identical coverage in 2024.
That average difference of $550 equates to about 24% higher premiums for homeowners with the lowest credit scores compared with those in the highest credit tier.
“Even after accounting for location and disaster risk, the credit-premium gradient remains unchanged, suggesting that lower-credit borrowers pay more for reasons other than physical risk exposure,” the paper’s authors wrote.
In other words, the higher premiums can’t be explained simply by where people live or how exposed their homes are to disasters. Even when those factors are held constant, homeowners with lower credit scores tend to pay more.
Credit scores can affect more than your borrowing costs—they may also influence what you pay for homeowners insurance. Improving your score and shopping around could help lower those premiums.
For the average U.S. homeowner, what’s known as the insurance burden—the share of monthly mortgage payments going toward home insurance—has increased over time. But homeowners with low credit scores have seen a much larger jump.
Insurance burdens were relatively flat between 2015 and 2019, though homeowners with very low credit consistently had a higher insurance burden than those with stronger credit. That began to change in 2020, when the burden started rising for everyone—but faster for those with low credit scores.
Since 2020, the average insurance burden for homeowners with very low credit has increased by about 1.7 percentage points per year, the paper’s authors found.
