Low credit scores blast Coloradans' home insurance rates
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Coloradans with low credit scores can expect to fork over $2,000 more annually on average for home insurance compared to high-credit policyholders, a new analysis finds.
Why it matters: Credit scores aren't necessarily indicative of somebody's ability to pay their bills — and tying them to insurance prices can disadvantage low-income and minority homeowners, among others.
The big picture: U.S. homeowners with low credit are charged $1,996 more annually compared to otherwise identical homeowners with high credit, per a new report from the Consumer Federation of America and the Climate and Community Institute.
Zoom in: The report shows the "credit penalties" — the difference between annual premiums for otherwise identical low-credit and high-credit policyholders — sits at $2,034 for Colorado.
Context: The report is based on over 600,000 nationwide "test quotes" representing "what a typical, hypothetical homeowner would be charged for homeowners' insurance."
- The researchers controlled for variables other than credit score. They defined a "low" score as about 630 on the 300-850 FICO range, and a "high" score as about 820.