Homeowners insurance companies take several factors into consideration when setting rates for individual customers. In most states, an applicant’s credit is one of those factors. Homeowners with poor credit might pay significantly more for insurance than those with good or excellent credit.

Why Insurance Companies Consider a Homeowner’s Credit 
Studies have found a link between an individual’s credit score and the likelihood that the person will file a homeowners insurance claim. People with higher credit scores generally manage their money well and pay their bills on time. They tend to set aside money for home repairs and maintenance, which means their properties are less likely to get damaged, and they’re less likely to file homeowners insurance claims. When it comes to homeowners with poor credit, the opposite is true.

How Homeowners Insurance Companies Use Credit to Set Premiums
Insurance companies don’t use credit scores per se when setting insurance rates. Instead, they use credit-based insurance scores. Those aren’t the same as credit scores, such as FICO, that are used to set interest rates and other terms for credit cards and loans.

Credit-based insurance scores are based on some, but not all, of the criteria that are used to calculate credit scores. People with high credit scores tend to have high credit-based insurance scores.

Each company has its own way of calculating insurance scores. That means that if you apply for homeowners insurance through several companies, the quotes you get might vary widely. That’s why it’s important to shop around and compare rates.

How to Get Homeowners Insurance If You Have Bad Credit
It’s possible to get homeowners insurance coverage if you have poor credit, but it will probably be challenging and expensive. People with poor credit scores can pay two or more times as much as homeowners with excellent credit.

In most states, insurers are allowed to refuse to provide coverage based in part on an applicant’s credit-based insurance score. Your house’s age and location and your history of filing homeowners insurance claims can also impact an insurance company’s decision.

States have Fair Access to Insurance Requirements plans available for customers who aren’t eligible for coverage through standard insurers. If you don’t qualify for a policy through a standard insurance company, you can seek coverage through your state’s FAIR plan. That type of coverage tends to be limited and costly.

Some homeowners insurance companies don’t consider an applicant’s credit in their decisions. If you can’t get a policy through a standard insurer, or you have gotten quotes that are higher than what you can afford, you can look for an insurer that won’t base its rates on your credit.