Companies are using your credit score to determine much more than your eligibility for low interest rates and sweet rewards, such as those offered by The Motley Fool Visa Card. That little number can play a role in what you pay for home and car insurance premiums.

A law restricting how insurance companies use the information they glean from your credit history is now in effect in Washington state. Look for other legislators to follow suit.

Washington State Insurance Commissioner Mike Kreidler said insurance companies are no longer allowed to cancel insurance policies or deny coverage based on certain information in a consumer's credit report, according to the Puget Sound Business Journal.

The things that cannot affect your coverage are:

  • The absence of credit history
  • The number of credit inquiries
  • Collection accounts identified as medical bills
  • The initial purchase or finance of a vehicle or house that adds a new loan to the consumer's existing credit history
  • The use of a particular type of credit or debit card
  • The total available line of credit held by the consumer

Beginning July 1, insurers in Washington must also disregard the same factors when determining premiums. Those companies that based policies on inaccurate credit histories must reissue or rerate the policy retroactive to the effective date of the current policy term.

If you live outside Washington, ask your insurer how your rates have been set. Then check your credit karma, and if need be, clean it up with our How-To Guide, FICO 850: Achieving Perfect Credit.