Credit Scores and Insurance Your FICO score could have more of an influence on your insurance rates than you think.

Insurance companies use complex algorithms to quote prices for consumers, but some of the variables in the equation don't seem endemic to the coverage—what gives? Credit score, for example, is a huge factor in determining premium rates, almost disproportionately so. It's unintuitive: trouble managing finances doesn't equate to trouble managing an automobile. Something, it seems, is awry.

Insurance companies see someone with poor credit and assume that they are more likely to file a claim. Basically, if you can't make rent or pay bills on time, they figure the likelihood of you filing a claim is higher, particularly a fraudulent or inflated one. In other words, whether or not you will get in an accident isn't as important as what your presumed reaction to the accident will be. In actuality, the companies hope you'll pay for the damages yourself rather than file a claim, although in most cases this is ill-advised. Obviously, someone with poor credit is less likely to be in a position to pay thousands of dollars out after an accident and will have to file a claim.

A bad driver with good credit could very well pay less than a good driver with bad credit. It's patently unfair, but insurance companies argue that it greatly benefits policy-holders with good credit. Sadly, this doesn't account for individuals with an unfavorable credit score by no fault of their own. If you're one of the lucky ones with a sparkling credit score, be sure to find a company that will reward you for it, especially if your driving record has more of a matte finish.

Conversely, there are a few companies that don't factor in credit score, though they're in the minority. If you're a good driver with some credit issues, a policy with one of these holdouts could save you hundreds. At the very least, it's worth shopping around to find out.