Auto Insurance and Your Jacked-Up Credit Score: When you think about all of the factors that go into your auto insurance, you usually think about various aspects of the car itself, or perhaps of your type of coverage. Of course, while those things do determine your auto insurance premium rates to a large degree, there are plenty of other factors that can figure in, as well. You might not know it, but depending on where you live your credit score might even be one of the things your insurance company uses to determine your rates.

Today, there are 46 states in which auto insurance companies can look at your credit score and consider it a factor in your premiums. California, Massachusetts, Hawaii and Maryland forbid this practice, but it’s open everywhere else.

Why would an auto insurance provider want to know your credit score? The auto insurance companies believe that a person who has a lower credit score is less of  a risk to the insurance company. The insurance companies use a form of the credit score (known as the “insurance score”) which takes into accounts things like late payments, type of credit, credit utilization and collections.

Some states are still struggling with this issue. For example, in Michigan, the Attorney General banned the practice of considering credit in determining insurance premium rates. The Michigan Supreme Court overruled it, however, and suggested that these scores were part of a reasonable way of classifying risk.

Of course, your credit score isn’t the only factor in your auto insurance premium rates. All of that other stuff – from your age to the type of vehicle to the place where you live to safety features – all play a part. The insurance companies each have their own formulas for how each factor is weighted. Even in states where it’s legal for the company to consider your credit score, not all of them do.

If you’re concerned that your credit score is negatively impacting your auto insurance rates, you have a few options. You can, of course, improve your credit score. You can consider switching to an insurance company that doesn’t use the score as a factor. You can balance out that higher cost with other choices, such as driving a vehicle with advanced safety features. If you feel strongly about the issue, you can engage in the democratic process to try to see it changed, as well.