Using credit histories has become a commonplace method for insurers to determine insurance premiums, but if you think having no credit history will save you the hassle, you could be in for a rude awakening when it's time to buy auto insurance.

The Missouri Department of Insurance says the state has become increasingly alarmed by complaints from consumers who have seen their premiums nearly double because they have no credit cards, no loans, and therefore no credit history.

In response to complaints, lawmakers in Missouri, as well as 34 other states, have proposed legislation to limit or restrict the use of credit histories by insurance companies. Missouri Insurance Department Director Scott Lakin says people have difficulty "understanding how their credit score relates to their being a safer driver."

Organizations such as the National Association of Independent Insurers have supported the use of credit histories to determine whether they'll sell you a policy and how much they'll charge you. They say there is a direct correlation between your credit history and the likelihood that you'll file a claim.

"Insurers have found that insurance scoring is a powerful predictive tool in assessing the potential for risk of loss," says Laura Kotelman, counsel for NAII. "Experience has shown that policyholders with positive credit information are less likely to file claims. The use of insurance scoring helps insurers allocate the cost of insurance more fairly. Insurance scores enable insurers to price products with greater accuracy with every customer paying according to their potential for loss. This is fair for all consumers and means that costs can be lower for most consumers."

Not everyone is convinced of the correlation. Robert Hunter, insurance director of the Consumer Federation of America, says while insurance companies claim studies show the correlation between credit histories and insurance claims, they refuse to show anyone the specifics of those studies.

Recently, Farmers Insurance Group decided to reevaluate its policy for those with little or no credit history. "We found we were losing some of our good customers," says Joe Downs of Farmers. "We decided to reduce the premiums by up to 40 percent for those drivers with little or no credit histories who also have no claims."

But that isn't an industry standard. Currently, there are no industry standards about how credit histories are used, and one company may determine you're a good risk while another considers you a bad one, depending on how they use your credit information. State officials in Missouri are concerned that some insurance companies use credit histories as a reason to cancel policies outright.

Legislative proposals to limit such practices in Missouri are on the agenda for discussion this session.