Laura Kotelman, counsel for the National Association of Independent Insurers, says the use of credit scores to determine premiums is intended to put more of the cost on the shoulders of the parties who submit more claims. She says that insurers aren't looking at your debt load, but rather for judgments, liens, and other indications of irresponsible behavior.

In addition, Kotelman says insurance companies have evidence that people with no credit histories often have worse loss histories than those with bad credit. Several states have denied insurance companies the right to cancel, decline, or nonrenew policyholders just because they have no credit history.

South Carolina provides insurance companies with three options when they are unable to get enough credit history information to use it as an evaluation tool: treat the consumer as if he has no credit history at all — if the company can prove lack of credit relates to a higher loss risk; treat the consumer as if he has a neutral credit history; exclude the use of credit as a factor in determining whether to issue a policy and what the premiums will be.

In South Carolina, insurance companies are also allowed to check credit scores before renewing an auto insurance policy. Because the insurance company is required to inform you that it will conduct a credit check when you initially apply for insurance, it doesn't have to tell you about subsequent rechecks. You can request a recheck as well if you think it will improve your rates, but only once a year, and your request has to be in writing.