In a nation that so heavily relies on credit -- mortgages, car loans, students loans, home-improvement loans, payday loans and credit cards, to name a few examples -- it is surprising that so many Americans do not understand their credit ratings.

So it comes as something of a shock to them to learn that their credit ratings are reduced to a three-digit number. And it's even more of a shock to find out that a low number can mean higher insurance rates.

At one time or another, just about everyone has applied for some form of credit. In most instances, the applicant was aware, sometimes vaguely, that a loan or credit card depended on a credit rating. But most Americans have never seen their own credit report and are unfamiliar with the information it contains or whether it is even correct information.

Fair, Isaac and Co. developed a way to condense a credit report into a number, usually between 300 and 850. The higher the number, the better the rating. A rating of 650 or above is really good.

In some ways, the so-call FICO number is a boon to credit consumers. Lenders and retailers can make instant decisions on requests for credit simply by going online with one of the Big Three credit-reporting companies and getting immediate access to the FICO number. No need to pore over a lengthy credit history or evaluate how good a risk someone is. It's all reflected in the number.

But more and more Americans who purchase auto insurance are discovering that this same FICO number is, either wholly or in part, determining how high their premiums will be or whether they will get insurance at all.

While some insurance companies rely on the FICO number alone, most use it as part of a blend of factors in determining premium rates on a case-by-case basis. But this system has its detractors, including the Missouri Department of Insurance, which says there is no hard data showing any connection between poor credit and higher insurance claims.

Consider the case of an elderly Missourian -- someone least likely to rely heavily on credit -- who gets a bill for auto insurance that doubles or triples the premiums. That person might assume the increase is because older drivers are considered less safe behind the wheel. In fact, it might be because the individual uses credit so infrequently that he has a low FICO number.

Missouri is one of 35 states currently addressing the use of FICO numbers for insurance purposes. The proposed Missouri law would require insurers to disclose how they use credit scores and would prohibit making the scores the only factor in setting rates. This seems like a fair approach.