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Everything You Need to Know About Your Home Insurance Score

April 5, 2018

If you're looking at buying a house, apart from your credit score, there's one more metric that plays a very important role: your home insurance score. A credit score helps lenders determine the probability that a borrower will pay back his mortgage. On the other hand, a home insurance score is used by insurers to determine the likelihood that the insured will file a claim during the term of the policy.

Why Is Your Home Insurance Score Important?

If you own a house, it is possible that at some point there may be damage to your home, or someone may get injured on your property. In such cases, if you have a home insurance policy, the ensuing expenses are covered by it. However, to obtain this facility, you have to pay a premium; and, the amount of your premium depends on your home insurance score. Normally, the higher your score, the lesser is the premium that you are asked to pay. That is why it is essential that prospective homeowners make an effort to maintain a good home insurance score.

What Are the Components of a Home Insurance Score?

In order to have a high home insurance score, you first need to know the factors that make up the metric. Various kinds of information are available on your credit report, and your home insurance score is derived by assigning positive and negative values of varying weight to this data. The resulting numbers are then run through a complex algorithm to finally determine your home insurance rating. While the exact variables considered for home insurance score calculations are not disclosed, here are some aspects of your credit history that an insurance model could incorporate into your report.

  1. Instead of the average age of your credit accounts, your home insurance score considers the age of your oldest account – be it a mortgage, installment loan or any other line of credit. Normally, the longer your oldest account has been open, the higher will be your insurance score.

  2. If you have any derogatory marks on your credit report, such as lawsuits for amounts owed on credit cards, personal loans, collection accounts, foreclosures, or bankruptcy, it will reduce your insurance score. These blemishes indicate that you are a risky borrower. Thus, in order to improve your home insurance score, you should take steps to remove these marks from your report.

  3. The status of each account on your report – whether it is being paid on-time and in full, or not, is listed on your credit report. The greater the number of accounts listed with a negative status, the lower your insurance score is going to be.

  4. The total dollar amount of debt that you are late in paying back is known as amount past due. The greater this amount is, the riskier you appear to be as a borrower, hence the lower is your home insurance score.

  5. Hard inquiries on your credit report occur when you apply for new lines of credit. A large number of such inquiries represents greater insurance risk and may lower your score.

  6. Credit card utilization is calculated by dividing the amount of used credit on your cards by your total credit card limit. A low ratio indicates lower risk, and therefore a higher score.

  7. The aggregate dollar amount of all your credit card limits is known as total credit card limit. If this figure is high, it means that your insurer will view you as a lower risk.

By keeping an eye on the above factors, and taking steps towards improving them, you can increase your home insurance score and lower your home insurance premium. As someone who is looking at investing in their own house, this can save you hundreds of dollars.

During house-hunting, another point of contention is the amount of down-payment that a purchaser is asked to pay. Normally, the greater this amount, the higher is the likelihood that the borrower will be approved for a mortgage. Many people borrow money for their down payment, and the interest for this loan often runs into thousands of dollars. For such individuals, our team at Fund&Grow has a solution. We offer people with good credit the opportunity to obtain $50,000 - $250,000 of unsecured credit at 0% interest for a period of 6, 12 or 18 months. This amount can easily be used to make a down payment on a property, or even for financing a small business. If you need this kind of financing, call us at (800) 996-0270 and we’ll do our best to take care of you.


Ari Page Ari Page is the CEO of Fund&Grow. He resides in Spring Hill, Florida with his wife and two children.

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