So, just what is the connection between a credit score and insurance premiums?

According to Adam Smith, president of Secur-All Insurance Agency, “A person with lower credit scores may have less access to capital and may look at insurance as an income generator. A good credit score allows for more choices, depending on the carrier, higher limits of available policies, better prices and levels of coverage.” Other factors impacting insurance premiums include the limits of the policy, the insured’s zip code and number of endorsements, says Smith.

Within the insurance industry, a person with a high credit rating is viewed as more responsible and dependable than is a person with lower scores. Since credit scores are calculated based on factors such as a person’s positive payment history and amount of available credit, a higher score tends to indicate a history of consistent payments and reasonable choices while a lower credit score mirrors late or skipped payments, repossessions, garnishments and other negative dings.

Interestingly, the reliance on credit scores for determining insurance premiums varies not only state by state but by insurance company to insurance company. What drives the differentiations among competing companies is the level of technology used an insurance carrier. For example, says Smith, insurance carriers such as Farmer’s and Progressive are “big and highly automated.” Companies relying on technology to attract customers do so to be able to sign new customers quickly. One way to do so while also quickly judging the credit worthiness of an insurance applicant is by tapping into their credit reports online, says Smith. That means their technology wizards work overtime to ensure their processes are both expeditious and thorough.

So do people with poor credit scores automatically pay higher insurance premiums? Not necessarily, says Smith. He suggests people with lower credit scores research small, regional insurance carriers versus large national companies that can afford to buy naming rights of athletic stadiums. Those smaller entities usually have less money to pay for expensive cyber-research, so they are less likely to focus on an applicant’s credit score when calculating insurance premiums.

But, be forewarned: Not only will an insurance applicant with a poor credit past pay more for their policy and their deductible than an applicant with a steady credit background, that difference can be enormous.

Just how much can poor credit score impact the insurance premiums and deductibles? “The swing can be as much as 30 to 40 percent,” says Smith.

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Tami Kamin Meyer is an Ohio attorney and writer who tweets as @girlwithapen.