Listen to this episode on Apple Podcasts or on Spotify, or wherever you listen to your podcasts. 

How Does Your Credit Score Affect Your Home and Auto Insurance Rates?

Have you ever wondered why your credit score might affect how much you pay for car or home insurance? Because apparently, even when you're just trying to insure your house or your vehicle, your credit history wants to get involved.

That's exactly what Vicky from Texas wanted to know when she called Erin and Keri. She's shopping for insurance and discovered that her credit score could influence what she pays.

So, naturally, Erin had a few things to say about that.

On this episode of Naked Money Meetings, Erin Skye Kelly and Keri Blakeney unpack the connection between credit scores and insurance premiums, why insurance companies look at your financial history, and what you can do to find better coverage without paying more than necessary.

And because no money conversation is complete without a little tough love, the ladies also get into something many homeowners conveniently forget: maintaining a house costs money. Yes, even the roof.

Does Your Credit Score Affect Your Insurance Rates?

In some places, absolutely.

Insurance companies are in the business of assessing risk. They want to know how likely you are to pay your premiums and how much risk they're taking on by insuring you.

In certain U.S. states, insurers use something called a credit-based insurance score to help determine eligibility and pricing.

Erin explains that this isn't necessarily a judgment about whether you're a good or bad person. It's about historical patterns and statistical risk.

Think of it like dating. If one potential partner has a history of broken commitments and unpaid debts, while another consistently follows through on their obligations, you might make different assumptions about the future.

Insurance companies look at financial patterns in a similar way.

Of course, a lower credit score doesn't mean you're out of options.

How Can You Get Cheaper Insurance With Bad Credit?

If your credit isn't where you'd like it to be, Erin recommends being much more proactive about shopping around.

Here are some places to start:

• Compare multiple insurance companies. Don't settle for the first quote or assume every insurer calculates risk the same way.

• Work with an independent insurance broker. A broker can compare multiple carriers and help you evaluate equivalent coverage.

• Ask about paying annually. Some insurers offer a discount when you pay your premium upfront rather than spreading it across monthly payments.

• Ask about bundling. Combining home and auto insurance may qualify you for discounts.

• Review your deductibles. A higher deductible may reduce your premium, provided you can comfortably afford it if you need to make a claim.

• Ask about other discounts. Safe driving, low mileage, multiple vehicles, and automatic payments may all be worth exploring.

The important thing is to compare apples to apples. A cheaper policy isn't necessarily a better deal if you're sacrificing coverage you actually need.

What Should You Ask an Insurance Broker?

Before agreeing to a policy, Erin suggests asking some important questions:

1. Does this company use a credit-based insurance score?

2. How much does my credit history affect my premium?

3. Will my rate be reviewed if my credit improves?

4. Are there discounts available for paying annually or bundling policies?

5. What coverage and deductibles are included in this quote?

Also, check how the insurer handles credit inquiries before authorizing one. In Texas, insurance-related inquiries have specific protections under state law.

Can Improving Your Credit Score Help Lower Insurance Costs?

It may, depending on where you live and how your insurer calculates premiums.

Erin recommends reviewing your credit reports for incorrect balances, late payments, or collections that don't belong to you.

She also discusses the importance of keeping credit card balances below their limits and gradually reducing credit utilization.

In the episode, she breaks down some specific credit utilization targets and explains why consistent payment habits matter.

And here's another important point: your credit score isn't the only factor insurers consider. Your driving history, property, location, coverage choices, and other underwriting details can all influence your premium.

What Does Your Roof Have to Do With Your Home Insurance?

Just when you thought the conversation was finished, Keri brings up her own home insurance situation.

She's been putting off getting a roof inspection, partly because she's worried the inspector might announce that she needs an entirely new roof.

Sound familiar?

Erin makes an important distinction: maintaining your home is part of owning it, even when those expenses aren't particularly exciting or Instagram-worthy.

Her advice? Consider hiring an independent roof inspector rather than automatically relying on a roofing company that also sells replacement services.

An independent assessment can help you understand the roof's actual condition and how much useful life it may have left.

Because discovering you need a new roof is much better when you've had time to plan for it than when water is dripping onto your living room floor.

Why Is Shopping Around for Insurance Worth Your Time?

Insurance is one of those expenses many people simply renew year after year without questioning the price.

But as Erin and Keri discuss, different insurers can offer dramatically different quotes for similar coverage.

Taking the time to compare policies, ask questions, and understand your options could make a meaningful difference to your household budget.

And that money is much better sitting in your bank account than disappearing into another monthly payment.

The bigger lesson? Building financial stability isn't just about earning more. It's also about understanding where your money goes, planning for the expenses that eventually show up, and making informed decisions along the way.

Key Takeaways

• Your credit history can influence insurance premiums and eligibility in some U.S. states.

• Insurance companies use different underwriting formulas, so shopping around matters.

• Independent insurance brokers can help compare multiple insurance providers.

• Paying your insurance premium annually may help reduce costs.

• Bundling policies, reviewing deductibles, and asking about discounts can help lower premiums.

• Check your credit reports regularly for errors and incorrect information.

• Improving credit utilization and maintaining consistent payment habits can strengthen your credit profile.

• Home maintenance, including roof inspections, should be part of your long-term financial plan.

• Don't automatically renew your insurance without comparing your options.

Want to Get More Out of Your Money?

Your credit score, insurance premiums, monthly payments, and home maintenance expenses all play a role in your financial picture.

In this episode of Naked Money Meetings, Erin Skye Kelly and Keri Blakeney get into the details, share practical advice, and remind us why taking an active role in our finances is so important.

Listen to the full episode for the conversation, the laughs, and Erin's advice on making smarter insurance and money decisions.

Because you don't have to have your life, your money, or your relationships figured out. You just have to be willing to look at them.

No shame. No secrets.

Listen on Apple: https://podcasts.apple.com/ca/podcast/your-credit-score-is-sleeping-with-your-insurer/id1462338073?i=1000792147422

Resources Mentioned and Recommended: 

• Erin Skye Kelly’s Book: Get the Hell Out of Debt
• Erin Skye Kelly’s Book: Naked Money Meetings  

Official financial and insurance resources

• Texas Department of Insurance: How Your Credit Score Can Affect Insurance Rates

• Texas Department of Insurance: Credit Scoring and Insurance

• Consumer Financial Protection Bureau: How to Get Your Free Credit Reports

• Federal Trade Commission: Free Credit Reports

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Explore more financial transformation resources at Erin Skye Kelly's website.