Does a poor credit score affect home insurance?

Your credit score can affect your ability to borrow money and buy goods on hire purchase, whether that’s a loan, mortgage or even a mobile phone. It can also have an impact on your home insurance, especially if you need to pay monthly—here’s why and what you can do about it.

What is a credit score?

Your credit score (or credit history) tells lenders how creditworthy you are. In other words, if they agree to give you a loan, what are the chances of you paying it back on time, and in full?

If you have a good credit score, you’re considered a low-risk candidate and have a history of making repayments on time and essentially managing your money well. This means you’re more likely to be approved for a loan and be offered more favourable interest rates.

If you’re high risk, then you probably have a low credit score. It means you may have struggled to pay bills and repay loans or credit card bills in the past. Sadly, it can also mean you’re less likely to be approved for a new loan and if you are, you can expect to pay higher interest rates compared to someone with a good credit score.

How do I check my credit score?

In the UK, there are three main credit reference agencies (Experian, Equifax, and TransUnion). When you apply for credit, the lender will check your credit report with one (or more) of these agencies. Each agency will hold their own information about you so don’t assume your reports will be identical across the three.

You can check your credit score for free, by visiting:

To learn about ways to improve your credit score, click here—it can take a while, but it's always a good investment to improve your credit score.

How does my credit score affect home insurance?

If you have a poor credit rating, some mainstream providers might decline to sell you a policy if you need to pay in instalments. Others may be willing, but it could mean having to pay higher monthly interest rates.

This is because paying in instalments is similar to taking out a loan as you haven’t fully paid for the product (in this example, your insurance). Fundamentally, the insurer is trusting you to pay for your insurance according to the terms agreed, while still providing you with the full service. The higher interest rate reflects the risk of non-payment. A poor credit score can affect all different types of insurance, not just home insurance.

Does getting a home insurance quote affect my credit score?

The short answer is no, simply getting a quote won’t affect your credit score. Insurers will check your report but only to verify your identity. This verification check is only visible to you and the credit reference agency and is known as a soft search.

The opposite is a hard search and only takes place if you buy a policy and pay for it in instalments. This search is visible to all other potential lenders. Applying for credit and having lots of ‘hard’ searches recorded on your file, can make it look like you really need it. This could be a red flag for lenders and could mean your application is turned down.

With that in mind, think carefully about applying for credit and how it might affect future purchases.

What can I do if I need home insurance and have bad credit?

If you have poor credit, a County Court Judgement (CCJ) or have been declared bankrupt, you can still buy home insurance. Your choice may be limited, and you might have to buy a policy from a specialist insurer but it’s not impossible to find cover.

If you’re worried about your credit score, it’s well worth checking your reports at each of the credit reference agencies. Make sure the information held is correct, if it isn’t, ask for it to be amended (even if it’s just a typo in your name or address).

Crucially, you should also check you’re not financially linked to anyone with a poor credit score as this can impact your creditworthiness. If you are and that link no longer exists (for example, an ex-spouse or partner) then you’ll need to ask the credit agency to break that link on your report.

How can I get the best value for money home insurance?

With day-to-day costs soaring, it’s tempting to cut corners, especially when it comes to products you can’t ‘see’ like insurance. But insurance is there to minimise the financial impact on you should you need to claim.

Whatever your needs, it’s vital to make sure your home and belongings are adequately covered. To make sure you get value for money without compromising on protection, consider:

And similarly, your credit score can affect your car insurance as well. Read more about that here.