--- title: The Unexpected Factor That Could Be Driving Up Your Homeowners Insurance Rates description: New research finds homeowners with poor credit pay about 24% more for the same insurance coverage than those with excellent scores. authors: - name: Martha C. White role: Writer url: https://money.com/author/martha-c-white/ education: BA, English, Princeton University at_money_since: 2015 articles: 354 covers: - Insurance - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Insurance - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2026-03-13T12:30:22.000Z' section: Insurance tags: - Insurance - News word_count: 639 canonical: https://money.com/credit-score-home-insurance-costs/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of a house made of money and a magnifying glass](https://img.money.com/2026/03/News-Overlooked-Factor-Driving-Up-H.jpg) You probably already know that having a low credit score means paying a higher interest rate when you buy or refinance a home. But a new [working paper](https://www.nber.org/system/files/working_papers/w34848/w34848.pdf) from the National Bureau of Economic Research, or NBER, found that there’s a second category of housing expenses that are influenced by your credit score: homeowners insurance premiums. According to the researchers, "A low credit score increases premiums roughly as much as it raises mortgage rates." The paper's authors analyzed data from a natural experiment that occurred when Washington state temporarily banned insurers from using credit data in setting home insurance rates. They wrote that their study "suggest\[ed\] that lower-credit borrowers pay more for reasons other than physical risk exposure." What's more, this poor-credit penalty is significant: Your credit has as much of an impact on your homeowners insurance premium as whether or not you live in a disaster-prone area. It’s not entirely surprising that credit scores influence home insurance rates. Except for a handful of states that restrict the use of credit reports in insurance underwriting, most insurance companies do use that information. People with lower credit scores are more likely to file claims after sustaining damages, possibly because they have less ability to borrow money to pay for home repairs. "Filing a claim may be the cheapest, if not the only way, to cover immediate unavoidable expenses," the paper noted**.** But the extent of the correlation between lower credit scores and higher premiums took researchers by surprise. They found that insurance companies charge people with poor credit 24% more for the exact same insurance coverage as people with excellent scores. ## Insurance premiums are rising for all — but not equally Homeowners around the nation have endured year after year of eye-watering rate hikes. But the pain has been more acute for those with bad credit. What's more, this financial pressure has been getting worse over the past decade. Data from ICE Mortgage Technology [found](https://mortgagetech.ice.com/resources/data-reports/march-2026-mortgage-monitor) that annual homeowners insurance premiums are up $149, or nearly 7%, from a year ago. Ironically, this is relatively good news, in that it’s a smaller hike than the double-digit increases homeowners endured for the last three consecutive years. Overall, premiums have gone up by almost 70% in the last five years alone. The average homeowner now pays roughly $200 a month, or roughly $2,400 a year. Although it’s well-known that homeowners in some locations pay much more, NBER determined that credit is as much a factor as location, and that rates for homeowners with poor credit have risenfaster than rates for those with good credit. Researchers found that insurance accounts for a rising share of homeowners’ total housing costs. This “insurance burden,” as the paper termed it, rose across the board from 12% in 2020 to 15% in 2024. For homeowners with low credit scores, though, that share rose faster, and to a greater degree. It jumped from 17% to 24% over the same time period. Homeowners in the bottom 20% of the credit spectrum paid, on average, $550 more a year than the 20% of homeowners with the highest scores. And those increases are increasingly wreaking havoc on homeowners’ budgets. As the NBER paper noted, while most homeowners have fixed-rate mortgage payments that don’t change from year to year, annual insurance policy renewals force homeowners to face sticker shock — and juggle their budgets accordingly — on a recurring basis. Because most insurance companies today use credit scores in their underwriting, homeowners who want to lower their premiums should take steps to [improve](https://money.com/how-can-i-improve-my-credit-score/) their credit and comparison-shop for the [best home insurance](https://money.com/best-home-insurance/) rates after raising their scores. ## Need to insure your home or looking to lower your rate? ### Click below to see if you can save. [View Rates](https://money.com/pr/ia3e9fbe72f1?ap_referrer=%2Fcredit-score-home-insurance-costs%2F&url=%2Fhome-insurance%2Flp%2Fhome-insurance-survey-publisher-premium) ![](https://s3.consumersadvocate.org/prd/image/image/12792/medium_fd9d54bc-1ff5-46ab-98d0-0c42e163a770.png) Find the Home Insurance policy that meets your needs [View Rates](https://money.com/pr/sd5a4f127f27?ap_referrer=%2Fcredit-score-home-insurance-costs%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/credit-score-home-insurance-costs/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Insurance", "item": "https://money.com/insurance/" }, { "@type": "ListItem", "position": 3, "name": "Homeowners Insurance", "item": "https://money.com/homeowners-insurance/" }, { "@type": "ListItem", "position": 4, "name": "The Unexpected Factor That Could Be Driving Up Your Homeowners Insurance Rates" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/credit-score-home-insurance-costs/#webpage", "url": "https://money.com/credit-score-home-insurance-costs/", "name": "The Unexpected Factor That Could Be Driving Up Your Homeowners Insurance Rates", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2026-03-13T12:30:22.000Z", "mainEntity": { "@id": "https://money.com/credit-score-home-insurance-costs/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/credit-score-home-insurance-costs/#breadcrumb" } }, { "@type": "NewsArticle", "headline": "The Unexpected Factor That Could Be Driving Up Your Homeowners Insurance Rates", "articleSection": "Insurance", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2026/03/News-Overlooked-Factor-Driving-Up-H.jpg", "width": 2880, "height": 1920, "caption": "News-Overlooked-Factor-Driving-Up-H.." } ], "author": [ { "@type": "Person", "name": "Martha C. 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She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!)\r\n\r\nKatherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others.\r\n\r\nKatherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. 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