Almost everyone is in debt at some point in their lives. Being “in debt” doesn't mean you aren't properly managing your finances; sometimes being “in debt” simply means you're currently paying off a loan you used to buy your new house, you're currently paying off a loan you used to buy your vehicle, or you simply have credit cards that haven't been completely paid off yet. These kinds of debts are pretty normal and don't pose any real threat to your credit score unless you fail to pay them back.

On the other hand, many Americans are so far in debt that they can't make regular payments to their creditors, if they're able to make payments at all. This kind of deep debt can be caused by a plethora of situations; loss of job, incarceration, and a serious illness or injury of a family member are just a few examples. These kinds of examples also don't mean people are mismanaging their finances; they just happened to be hit with some bad luck that can harm their credit scores.

At the same time, this kind of deep debt can be caused by the inability to properly manage finances. Sometimes people apply for, and use, more credit cards than they can pay for. Sometimes people spend more money on clothes and entertainment than they do on their bills. Whatever the reason, their finances are mismanaged, and their credit scores, too, are harmed.

Most people know that when their credit scores are poor, they're going to have a hard time getting loans until they've built their credit up again; however, not everyone knows that credit scores also affect insurance policies. People with poor credit scores are viewed as being “high risk” and can have trouble getting an insurance policy, much less an affordable one.

Financially plan ahead for emergencies, and manage your finances in the meantime; your future insurance policies depend on it.