Homeowners with poor credit pay more for insurance in these states

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Click this slideshow to see the states with the highest home insurance rates for bad credit. Rates are based on a $ 300,000 home policy with a $ 1,000 deductible and $ 300,000 liability coverage.

10. Nebraska

Average home insurance rate for bad credit: $ 7,135

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9. Louisiana

Average home insurance rate for bad credit: $ 7,162

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8. Texas

Average home insurance rate for bad credit: $ 7,330

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7. Tennessee

Average home insurance rate for bad credit: $ 7,555

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6. Arkansas

Average home insurance rate for bad credit: $ 8,197

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5. Minnesota

Average home insurance rate for bad credit: $ 8,213

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4. Kentucky

Average home insurance rate for bad credit: $ 8,8505

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3. North Dakota

Average home insurance rate for bad credit: $ 8,820

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2. Kansas

Average home insurance rate for bad credit: $ 9,290

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1. Oklahoma

Average home insurance rate for bad credit: $ 11,048

(Photo: Shutterstock)

Unbeknownst to many consumers, credit scores can play an important role in determining personal insurance rates. Especially in home insurance, insurers will often use credit insurance scores (CBI) when setting rates, in addition to other factors including location, type of house, complaint history, and more.

Similar to a credit score, CBI scores are developed by FICO and take into account a range of credit characteristics, depending on the Insurance Information Institute (III). Outstanding debt, credit history, payment history, types of credit, and other factors are taken into account, each with an assigned weight. When calculated together, a lower CBI score translates into a higher risk for the insurer – and generally a higher premium for the consumer.

“Insurance companies often use insurance scores because actuarial studies suggest that the way a person manages their financial affairs, which these scores indicate, is a good predictor of insurance claims,” says III . are more likely to file a complaint. This allows insurers to better match insurance premiums with the risk an individual insured might pose, preventing better risks from subsidizing bad risks.

The impact of bad credit

Recently, assurance.com determined the average home insurance premium for consumers with good and bad credit in the 50 states. On average, the insurance comparison website found that homeowners with bad credit can expect to pay 122% more than those with good credit on their home insurance policy.

The slide show above shows the ten states with the highest average home insurance rates for consumers with poor credit.

Some states, however, offer protection to consumers with below-average credit. California and Massachusetts prohibit insurers from using credit history to determine insurance rates, while Maryland prohibits this practice only for home insurance.

For consumers who find that their credit has negatively affected their insurance rates, there are ways to improve their score and have a positive impact on what they pay.

“People with poor credit can improve their score and seek insurance,” Kevin Haney, owner of ASK Benefit Solutions, told Insurance.com. “They can improve scores by paying their bills on time, reducing their debt and disputing errors in their consumption report. They can get multiple home insurance quotes because each issuing company does the underwriting differently. Obtaining an insurance quote results in a smooth application, which does not hurt your credit score.

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