Here's another reason to keep your credit score healthy: It'll affect your insurance rates.
We were surprised to read in the New York Times just how much:"You're likely to pay about 32 percent more on average for homeowner insurance than those with stellar credit, according to a report from the insurance data firm Quadrant Information Services." Got bad credit? You'll pay about twice as much, according to the paper.
We asked Jeff Schneider, president of Gotham Brokerage, to give us the NYC-specific lowdown, and Schneider confirmed that his company—and all others—do, indeed, look at credit scores when deciding on insurance rates. "Location and credit scores are now the major factors in determining rates," he says. Same for owners or renters.
The trend for insurance companies to run credit scores is relatively new and has become de rigueur in the last year, says Schneider. "Insurance companies take credit scores as a way to predict future losses. People have questions about whether that's accurate or fair, and that's another issue. But companies say there's a correlation between the two."
Don't panic just yet, though. While Schneider says every insurance company has its own way of measuring whether credit is good, your rate is only likely to be impacted significantly if it's very good or very bad. "There shouldn't be much of a rate difference for people in the middle," he says.
And note that bad credit alone won't have a huge impact on insurance rates. But, "if you live close to the water and you have a bad credit score, and a burglary a few years ago, then you'll see pretty significant increases," he says.
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