Getting Home Insurance With Bad Credit Without a Credit Check

Unless you live in California, Maryland or Massachusetts — which prohibit using credit scores to determine home insurance rates — your money management history and spending behaviors can dramatically impact how much you pay for home insurance.

Your credit score is just one factor used to determine insurance rates, along with claims history, age of the home and appliances and other criteria. MoneyGeek explored how to find the best homeowners insurance companies for people with low credit scores and how to get home insurance without a credit check.

• Getting Home Insurance Without a Credit Check
• Options for Cheap Home Insurance With Bad Credit
• The Basics of Getting Home Insurance With Bad Credit
• Saving Money on Home Insurance With Bad Credit
• Bad Credit Home Insurance FAQs

Yes, you can get home insurance without a credit check, but it’s not guaranteed unless you live in California, Maryland or Massachusetts. Unfortunately, there is no easy way to find the companies that don’t perform a home insurance credit check in other states.

It can be challenging to get a home insurance quote without a credit check, but the likelihood that you will be denied coverage because of your credit is slim. However, it's important to know upfront that your rates will likely be significantly higher if your credit score is low.

Getting home insurance with bad credit is possible in all states, though finding cheap homeowners insurance can be challenging. By shopping around and comparing quotes, you can find the most affordable options available.

To put the price difference into perspective: the average cost of home insurance is $1,979 per year for a policy with $250,000 in dwelling coverage. The cheapest rate MoneyGeek found for homeowners with bad credit was through Nationwide at an average yearly cost of $2,948 for the same coverage — that's $969 more expensive than the average cost of coverage.

Chubb is the next most affordable at $3,095 per year. Allstate — who typically is one of the cheapest for homeowners with good credit — came in third among widely-available insurers, at $3,984 per year, on average. If you are eligible for USAA is may be worth getting a quote as it was the third cheapest insurer for those with bad credit.

If you have bad credit, your home insurance costs are likely to be significantly higher than those with good credit. Learning more about how companies use your credit score to determine your premiums can give you insight into the process and ways to lower your insurance costs.

Credit is a huge factor in how insurance companies determine your rates. Depending on the results of your home insurance credit check, you could pay hundreds of dollars more per year for homeowners coverage.

Studies have shown a correlation between poor money management habits — like paying bills late — with a higher risk of filing claims. If you have bad credit, insurers will rarely, if ever, decline coverage. Instead, you’ll pay higher rates for homeowners insurance to cover the higher risk you pose to insurers.

But credit isn’t the only factor that affects your home insurance rate. The age of your home and appliances, the presence of safety features, the type of construction, your coverage needs, your age and your claims history are also considered when insurance companies calculate your premiums.

Contrary to popular belief, insurance companies use your credit-based insurance (CBI) score — not your FICO score directly — to determine your rates. While models used to calculate an individual's CBI vary by insurance company and are proprietary, some known factors affect it.

Factors that can produce a high (good) CBI score are:

• Low credit usage
• Good payment history without late payments
• A mix of credit accounts in good standing
• Long credit history

If a home insurance credit check comes back with these factors, you could receive a low (bad) CBI score and pay more for coverage:

• Collections on accounts
• History of late payments
• High credit usage
• Multiple recent credit applications

Because many of the same indicators are used to determine both FICO and CBI scores, having a low FICO score tends to mean you'll also have a low CBI score, and vice versa.

Lenders use FICO scores to determine if you qualify for credit and at what interest rate. Insurance companies use CBI scores to determine how likely you are to file a claim.

While your FICO score is readily available, CBI scores are not provided to the public.

Paying bills on time and reducing your debt and credit inquiries can improve both your FICO score and CBI score. Improving these scores increases your chances of getting cheaper insurance premiums and better credit card and loan terms.

To help make the process of finding an affordable provider easier, MoneyGeek answered the most common FAQs about getting homeowners insurance with bad credit.