When you opened up your first credit card account in college, it felt like you were being given free money. No one explained to you that you would have to pay back the money you were spending.
Needless to say, your swipe-happy 18-year-old self has made it difficult for the now 30-year-old you to qualify for loans and to get good deals on everything from car payments to homeowners insurance rates. Why didn’t high school economics better explain what credit was?!
Don’t fret. When you do business with CoverHound, we can help you find affordable homeowners insurance quotes that won’t break the bank.
By matching you with homeowners packages that protect your home and stays in your budget, you can work on improving your credit without the added stress of paying an exorbitant insurance premium.
Poor Credit is More Common Than You’d Think
According to a report compiled by the Corporation for Enterprise Development (CFED), 56 percent of Americans have bad credit. Having a bad credit score results in other financial stresses, including higher loan and insurance rates.
There are several reasons people may not be able to pay their bills on time. Maybe there was a medical emergency and every dollar of their savings went into paying off their medical bill. Perhaps they were suddenly terminated from their job and were no longer making a steady income.
Unfortunately, the reasons behind why bills were not paid does not factor into one’s credit score number.
Bad Credit, High Rates
Consumers with bad credit are seen as a liability by financial institutions. How does one get a bad credit score? If you haven’t paid your bills on time (or at all), money lenders and insurance companies deem that by your financial history, you are irresponsible with money. Having what is categorized as an irresponsible financial history hurts your credit, resulting in higher lender costs.
While it doesn’t outright make sense to charge people with bad credit a higher rate, financial institutions do so to safeguard themselves against clients who by their histories don’t always make good on payments. A higher rate is essentially a financial precaution; if the client doesn’t make their payment, their previously paid higher interest rates will help to make up the difference.
Just as consumers with poor credit are in effect punished with higher mortgage and insurance rates, consumers who have what is classified as good to excellent credit are rewarded with lower monthly mortgage and insurance payments.
The Huffington Post reports that consumers with fair credit “pay 36 percent more for homeowners insurance than…[if] they had excellent credit. If [credit] is classified as poor, the average annual [homeowners insurance] premium increase rises 114 percent.”
When you use insurance comparison websites like CoverHound, we make it our job to help you find an insurance partner that looks at you and your needs, not at how much money they can make off of you.
Homeowners insurance is supposed to protect you and your financial holdings. Visit CoverHound today and we’ll match you with a company that makes that their mission!