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Does Renters Insurance Require a Credit Check?

When you rent an apartment, condominium or house, renters insurance can protect your property from theft or damage and yourself from potential liability if someone visiting you is injured.

The premium you'll pay for this type of insurance is generally inexpensive relative to auto and medical insurance and is influenced by several factors. Among them, your credit-based insurance scores are often used to help determine the risk you pose to a renters insurance provider. Keep reading to find out how your credit score could impact your insurance premiums.

What Is Renters Insurance?

Landlords have their own insurance to protect the unit you live in, but that insurance won't cover loss of your personal property due to fire, theft or disaster. To protect the cost of your belongings, you'll need renters insurance, which generally covers the following:

  • Property: Renters insurance pays to replace your personal belongings if they're stolen or damaged by a covered risk, such as a fire, windstorm or water damage from an overflowing bathtub. In most cases, renters insurance doesn't cover damage due to flood or earthquake; you'll have to buy separate policies for that. If you want to insure certain costly items, like a coin collection, valuable art or expensive jewelry, you may need to buy a separate rider.
  • Liability: If a visitor to your rental unit is injured on the property, renters insurance can cover their medical costs, as well as your legal costs if they sue you. Renters insurance may also cover costs if a member of your household damages another tenant's property.
  • Loss of use: If your rental property is unlivable due to a covered risk—for example, a fire that burned your apartment—renters insurance pays your living expenses while the unit is being repaired.

You aren't legally required to get renters insurance, but some landlords make it a condition of your lease. Check your lease to see if your landlord mandates rental insurance for tenants.

Does Credit Affect Renters Insurance?

Many factors influence your renters insurance premiums, including the insurer you choose, where you live, the amount of coverage you want and your credit score. However, the credit score that insurance companies check is not the standard FICO® Score or VantageScore® you may already be familiar with.

When you apply for a credit card or loan, lenders want to know that you'll be able to pay the money you owe, so they check your credit score. When you apply for insurance, insurers' primary concern is how big of a coverage risk you pose. That's why insurance companies in most states use specialized credit-based insurance scores. Credit-based insurance scores take your credit history into account to try to shed some light on how statistically likely you are to file a claim. Not all states allow these scores (California and Maryland, for example); check with your state insurance department to see if yours does.

Having a higher credit-based insurance score generally qualifies you for lower insurance premiums. You can't check your credit-based insurance score, but these scores are generally based on similar data as your regular credit score. For example, LexisNexis® Risk Solutions' Attract™ and FICO credit-based insurance scores rise and fall based on things such as bill payment history, credit utilization and records of defaults and collections—all factors that affect your consumer credit score. If you have a good credit score in general, you can probably feel confident that your credit-based insurance score is good, too.

Your credit-based insurance score isn't the only factor in the cost of your premiums, however. When determining your personal risk for renters insurance and the cost of your policy, insurers also consider:

  • The property: Do you live in an area that has a high crime rate or is subject to forest fires or tornadoes? High-risk locations typically mean higher premiums. However, safety measures such as smoke alarms or security guards can lower your costs.
  • Your relationship with the company: If you already have one type of insurance with a company, you'll generally get a multipolicy discount when you buy renters insurance.
  • The amount and type of coverage: The more coverage you need, the higher your premiums are. You'll also pay more if you need supplemental insurance for a high-end computer, antiques or other expensive possessions. Replacement cost coverage, which pays to replace your belongings with equivalent new items, costs more than actual cash value insurance, which pays out the depreciated value of your belongings today.
  • Your deductible: You can lower your premiums by opting for a higher deductible; just be sure you can handle paying it in the event of a claim.

Will a Renters Insurance Credit Check Impact Your Credit Score?

Insurance companies do check your credit when you apply for insurance, but it won't impact your credit score because it's considered a soft inquiry. A hard inquiry, which can temporarily reduce your credit score by five to 10 points, occurs when your credit is reviewed in relation to an application for credit. A soft inquiry is not generally tied to an application for credit, so it has no effect on your credit score (although it will remain on your credit report for up to two years).

How to Apply for Renters Insurance

Just as with any other purchase, you should shop around to get the best rates for renters insurance.

To get started, figure out how much coverage you need by estimating the value of your personal belongings. Go from room to room making notes on everything you own, from your furniture down to the contents of your linen closet. It's a good idea to take photos or record videos of your "property tour" to show what you own. Once you've got a list, estimate how much it would cost to replace everything.

Next, ask your landlord what kinds of security and safety measures the property has. Burglar alarms and security locks can reduce the risk of theft, while fire alarms, sprinklers and smoke detectors can reduce the risk of catastrophic fire—all of which can lower your renters insurance premiums.

You can apply for renters insurance with most major insurance companies simply by going online, calling or visiting an insurance agent. You'll typically be asked to provide:

  • Your name, address and telephone number
  • Your Social Security Number
  • Your birth date
  • Your marital status
  • The rental property's address
  • A start date for the insurance (such as the date you'll be moving in)
  • The value of the personal property you want to cover

You may also be asked if you have a pet; dog bites are not often covered by renters insurance liability coverage.

Renters Insurance and Your Credit Report

Renters insurance is a smart investment for any tenant. There are several ways to keep your premiums low, including raising your deductible, having safety precautions in place and maintaining a good credit-based insurance score. You can get an idea of your credit-based insurance score by checking your regular credit score, since the two are usually similar. Once you've got renters insurance, be sure to pay your premiums on time; doing so will help you maintain a good credit score.

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