Individuals who have bad credit are paying more to cover their properties, regardless of other factors.
For individuals who don’t have a good credit record, if they live in Colorado, it is more than likely that they are paying more in their homeowners insurance premiums than someone with a better credit history but who has a similar property.
The results of a recent study have shown that there is a massive difference in insurance premiums based on credit scores.
The study was conducted by InsuranceQuotes.com an showed that residents in Colorado whose credit scores are poor pay dramatically more for their homeowners insurance policies than their counterparts with good credit. In fact, the research indicated that those with poor credit are paying an average of 141 percent more than people who have excellent credit histories. Clearly, this is a very large difference based on this single premiums calculation factor that is not directly related to the size of a property or the expense that would be related to repairing or replacing it in case it is damaged by a covered peril.
Though homeowners insurance is typically higher for people with bad credit, this is far higher than the national average.
Across the country, said the report, people whose credit is bad are paying an average of 91 percent more for their property insurance policies. That said, Colorado is not the state in which this factor makes the greatest difference in the amount that is paid. That state’s differential is actually the fifteenth highest, showing that there are many other states that give that calculation factor even greater priority.
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When looking more toward a middle ground in terms of credit scores, individuals who have fair credit – as opposed to being bad or good – and who live in Colorado are paying about 48 percent more for their policies than individuals who have excellent credit.
This shows that even the slightest improvement in a credit score can make a considerable difference in the way that insurers view the risk associated with providing a specific policyholder with homeowners insurance coverage. When shopping for this type of policy, it is often recommended that a consumer check his or her own credit history to make sure that it is accurate, as it is clear that mistakes lowering a score could be very costly.