Got so-so credit? You are likely paying more in premiums than people with excellent credit. By Kimberly Lankford, Contributing Editor September 5, 2014 I know that your credit score can affect your car insurance premiums. Can it also affect your homeowners insurance rates?SEE ALSO: 9 Secrets to Better Credit Yes, in most states your credit score can make a big difference in your home insurance rates. A recent study by InsuranceQuotes.com, a Bankrate company, found that homeowners with poor credit pay 91% more for home insurance than people with excellent credit. Even people with median credit pay 29% more than those with excellent credit. “Insurers have found a direct correlation between a consumer’s credit and the likelihood that he or she will make a home (or auto) claim,” says Laura Adams, senior insurance analyst for InsuranceQuotes.com. The study defined “excellent” credit as the top 10% of credit-based insurance scores. Insurers usually create their own credit-scoring models, and the calculations they use are different than the versions that mortgage and auto lenders use. “Instead of judging your ability to repay a debt, a credit-based insurance score is designed to predict the likelihood of a future claim,” says Adams. “For instance, it may weigh factors such as having a long credit history or the number of accounts in good standing more heavily than a regular credit score.” The results can vary a lot by insurer and state. The biggest difference in rates was in West Virginia, where people with poor credit pay an average of 208% more than people with excellent credit, followed by Virginia (186%), Ohio (185%) and Washington, D.C. (182%). On the other hand, insurers are prohibited from using consumer credit information when setting home insurance premiums in California, Massachusetts and Maryland. And even though insurers are allowed to use credit informaton in Florida, the study found that it does not typically affect premiums. (Location of the home and other hurricane-risk factors have a much bigger impact.) See InsuranceQuotes.com’s home insurance page for more information about each state’s results. Advertisement In states where using credit information to set insurance rates is permitted, about 85% of insurers use credit as a factor in setting home insurance rates, versus 95% for auto insurance, says Adams. No matter what score is used, it always helps to pay your bills on time and keep your charges to less than 30% of your available credit. Also check your credit report for errors, even if you aren’t about to take out a loan. You can get one free report per year from each of the three credit bureaus at www.annualcreditreport.com. Got a question? Ask Kim at email@example.com.