Youth has its perks; but cheap auto insurance isn’t one of them. Generally, older, married individuals of the female persuasion snag the best rates. Factors like age, gender and marital status are widely known to affect insurance premiums. But if you’re like most drivers, you’re probably not aware that applying for several credit cards or financing an appliance or jewelry purchase could affect your insurance as well.

Although insurers have been using credit reports to determine insurance rates for over a decade, many consumers–approximately two-thirds of 1,578 people surveyed, according to a 2005 report by the Government Accountability Office–are still unaware of the effect their credit histories could have on their premiums.

Insurance agencies justify credit-based insurance scores by maintaining that there’s a connection between an individual’s money-management skills, or lack thereof, and their insurance risk. The Insurance Information Institute authored an article on the topic, which states, “[Insurance scores] are a measure of how a person manages his or her financial affairs. People who manage their finances well tend to also manage other important aspects of their lives responsibly, such as driving a car.”

Although the reasoning behind credit-based insurance scores is fairly clear, what might help or hurt your score is not. That’s because currently, no consistent scoring formula exists among insurance companies; you may be the epitome of financial responsibility with Progressive’s model, but Farmer might perceive your recent loan inquiries as unstable.

According to Consumer Reports, Fair Isaac’s Assist insurance formula, which several insurers use, relies more on your credit limits, balances and loan inquiries than your payment history to determine your score. The formula Progressive uses evaluates 12 items–things such as opening a credit card in the past four months or having a balance over 40 percent of your maximum will unfavorably affect your score.

Critics of credit-based scoring assert minority and low-income consumers are unfairly impacted. The study “Costly Credit: African Americans and Latinos in Debt,” provides some support, reporting that in 2001, 84 percent of African Americans and 75 percent of Latinos had credit card debt compared to 51 percents of whites. And between 1992 and 2001, the greatest increase of debt hardship fell on white families making less than $15,000–swelling from 19 to 28 percent.

It’s certainly confusing, but not all bad. Insurance scores can decrease your premiums too. You are entitled to a free, annual copy of your credit report from each of the nationwide credit-reporting companies that can help you see what your insurer sees.

So take a look at your credit score before you shop insurance. Meanwhile, check out some tips that could help improve your score, courtesy of Consumer Reports.