Many insurance policyholders and prospects may not realize that their FICO credit score is different than their credit-based insurance score. To be sure, the credit score logged by Fair, Isaac and Company, or the credit reporting company better known as FICO, does factor into a credit-based insurance score, which insurers use to determine a policyholder's premium. But, in states where credit is used to determine insurance premiums, a FICO score may not be the only consideration for credit-based insurance scores. "An insurance company can only use your credit-based insurance score as one factor in its underwriting process," according to the National Association of Insurance Commissioners. "It will be considered with several other factors that vary by insurance type." The slideshow above illustrates the factors as well as the weight of each of those factors in determining credit-based insurance scores. FICO scores range from 300 to 850. Roughly three out of five Americans have FICO scores over 670, which is considered good, according to the business news site The Motley Fool. The average American has a FICO credit score of 706. A chief reason that someone might have a low credit score for a prolonged period of time is that individual failed to watch their credit report and ensure that everything reported is accurate. For this reason, the NAIC recommends that individuals monitor their credit reports. People are allowed to access one free credit report a year from each of the top credit reporting bureaus: Equifax, Experian and TransUnion. They can be accessed all at once by logging on to www.annualcreditreport.com. Are there other reasons that insurers care about policyholder credit? Yes. "Insurance scores are used to help insurers differentiate between lower and higher insurance risks and thus charge a premium equal to the risk they are assuming," says the Insurance Information Institute. "Statistically, people who have a poor insurance score are more likely to file a claim." Insurers may also consider where a policyholder lives, their age, and the condition of what's being insured before determining premium pricing. Here are three things the NAIC wants consumers to remember about their credit report and how it may impact their insurance: |

1. Not all states allow the use of credit-based insurance scores in determining premiums. Some states only allow it as one factor for property insurance like auto and homeowners insurance. Other states allow it to be used with any type of insurance. Check with your state insurance department to find out what the law in your state allows.
2. Generally, five different factors are used to determine your credit-based insurance score: payment history, outstanding debt, credit history length, pursuit of new credit and credit mix.
3. You can improve your credit-based insurance score. Make payments on time. Pay bills, taxes and fines/fees as agreed. If you are behind on payments, catch up and stay current. Keep balances on credit cards as low as possible.

Keep reading: |

• 11 states where credit score affects car insurance the most
• Homeowners with poor credit pay more for insurance in these states
• Root Insurance vows to remove credit factors from policy ratings