Homeowners across the United States are paying dramatically higher insurance premiums if they have lower credit scores, according to new research from the Consumer Federation of America (CFA) and the Climate and Community Institute. The study found that a typical homeowner with a low credit score pays nearly $2,000 more each year—almost double—than an otherwise identical neighbor with a high credit score.
The disparity is so stark that the report revealed a surprising comparison: homeowners with low credit scores in low-risk areas often pay more than high-credit homeowners in regions facing frequent hurricanes, floods, or wildfires. Even those with “medium” credit scores, roughly equivalent to a 740 FICO, pay on average $792 more annually, or 39% higher, than their higher-credit counterparts.
“This practice unfairly penalizes people who may be financially struggling, regardless of how safe or well-maintained their home is,” the CFA noted. For many families, the growing burden of insurance costs only adds to the challenges of rising housing expenses.
Massachusetts Stands Apart
While most states allow insurers to use credit history in determining premiums, Massachusetts is one of a handful of states that prohibits the practice. Under state law, insurance companies in the Commonwealth cannot factor credit scores into home insurance pricing.
That ban makes Massachusetts a standout in protecting homeowners from the financial penalties tied to personal credit history. Instead, rates are based on other risk-related factors, such as the property’s location, age, and condition, as well as coverage choices and claims history.
For residents relocating to Massachusetts, this policy offers a measure of financial security. Homeowners don’t have to worry that a dip in their credit score—whether due to medical debt, student loans, or other financial setbacks—will double their insurance premiums.
A Broader National Debate
The CFA’s findings are likely to fuel ongoing debates nationwide about fairness in insurance pricing. Critics argue that using credit scores to determine rates disproportionately impacts low- and middle-income households, while industry representatives claim the practice helps insurers more accurately assess risk.
For Massachusetts homeowners, however, the message is clear: in the Bay State, your credit history won’t dictate how much you pay for home insurance. That protection can be a relief for individuals and families moving into the state, particularly at a time when insurance costs are climbing in nearly every region of the country.