Having poor credit affect a high number of Americans and can be difficult to overcome. Loans are harder to come by, money is tighter for necessities, and insurance companies don’t trust you to pay your premiums. So, how do you get homeowners insurance if you have bad credit?
One of the best ways to get insurance companies to give you a policy is, unfortunately, one of the hardest ways – boost your credit score. By bringing your credit back up, insurance companies will begin to see that you’re more trustworthy with their money and will be more willing to pledge protection from certain risks. Again, this option can be difficult and time-consuming. If you’re attempting to build your credit back, it will take more than a decision to spend less.
So, what if you need insurance now? You’re attempting to buy a house, but the mortgage lender won’t lend to you until you can convince an insurance company to allow you to buy a policy. If this is the case, then your best option might be to settle. Settling for less inclusive insurance might leave you unprotected from more risks and financial loss, but you might be looking at a more achievable premium. Once you have a less inclusive policy, it can act as a placeholder until your credit score becomes more acceptable for insurance companies.
How your credit affects your insurance
Insurance companies have a high standard for credit requirements. Often times you’ll find that a credit score of 650 or lower will result in higher premiums or denial of an application. The lower your score, the less likely an insurance company will sell to you. Once your credit score drops below an insurance company’s minimum requirement, you’ll find it difficult to earn that company’s trust back. Raising your credit score to above their minimum might not be enough and you may have to shop elsewhere for a policy.
If an insurance company is willing to sell a policy to you, but your credit remains below their desired amount, you may be faced with higher premiums. This is the insurance company’s fee for trust. If they don’t feel as if you’re to be trusted to pay them back, they’re going to attempt to get every cent out of you while they still can. This means high annual premiums until your credit gets into their discount range.
Credit checks
A pressing question for anyone who has poor credit is, “can I get home insurance without going through a credit check?” A credit check is when an insurance company looks at your credit score before offering you a homeowners policy. Most insurance companies make this common practice so finding a policy without this process is difficult.
Often times a credit check is required by your mortgage lender and recommended to your insurance company as well. There are few insurance policies that can be purchased without a credit check but there are options out there. You may find larger nation-wide insurance companies who might be willing to offer you a homeowners policy without a credit check. Keep in mind that with these policies, you may be looking at less comprehensive coverage for higher premiums.
Cheap insurance for bad credit
The less you pay on your premiums, the less coverage you’re going to get. This might be the only option for some and pursuing a low-cost homeowners insurance policy is a must. If that’s the case, you should consider the larger insurance companies who operate nation-wide. These companies tend to offer their policyholders cheaper basic policies at the cost of personal interaction. Their policies might be the same as a regional protector, but their premiums are lowered.
For people with lower credit, searching nationally for your homeowners insurance might be the smartest option. You could avoid the issues faced in a credit check, and you might find a cheaper policy that covers the same amount as a regional or local company would. Having a low credit score is not the end of the world. It’s a difficult path ahead, but it’s one that millions of Americans are on every day and one that you can navigate.
