1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

What’s the score?

your credit score A credit score is a shorthand way of expressing your credit history.

Credit histories are very complex. It would take a long time for businesses to go through each individual history and decide whether or not the person is creditworthy. To make it easier, all of the data is converted into a single three-digit number.

Credit scores range from 300-850. Anything above 680 is considered to be a good score.

Video: Tips to Help You Raise Your Credit Score

Lenders use your credit score to decide whether or not to give you credit and at what rate. Knowing how that score is calculated can save you thousands of dollars a year in borrowing costs.

How the score is calculated

Your credit score is calculated using a complex mathematical formula that takes into account all of the relevant information that is contained in your credit report. The three credit bureaus (TransUnion, Experian and Equifax) all use slightly different formulas, resulting in three different credit scores. Your credit score can go up or down by as many as 40 points depending on how the data is weighted and evaluated.

Banks and other lenders may use one or more of the credit bureaus when checking your credit score. As a result, you can be offered very different terms on a similar loan, depending on where the lender gets the information.

Video: Understanding the Credit Score Ratings

How to improve your score

There are many ways to improve your credit score. The easiest way is to make sure that you pay your bills on time. Late or missed payments will reflect badly on you, even if you have the money to pay the bills.

Young people sometimes have trouble getting credit because of insufficient credit history. If you’ve never had a credit card or taken out a loan, lenders have no way of knowing whether or not you can be trusted to make regular payments. But how do you build a credit history if no one will give you credit? It’s a catch-22.

The simplest thing to do is to get a store credit card. Store cards have lower limits than regular credit cards and are easier to get. Once you’ve used the store card for a few months, you can apply for other types of cards.

Having more than one active credit account will help your credit score, as long as you keep up your payments. Three to six is the ideal number. Any more than that, and you may be considered high-risk again.

Lenders like to see a stable record of credit card use. Customers who constantly change credit cards in search of a better rate are less attractive to lenders than those who keep the same cards year after year.

If you’re going to carry a balance on your credit cards, try to keep it as low as possible. People who are already heavily in debt are more likely to be turned down for further credit.

Some people believe that checking you own credit report lowers your credit score. This isn’t true. It’s recommended that you check your report at least once a year to make sure that it’s accurate and up-to-date.

Every time you apply for credit, the credit bureau makes a note of it onyour credit report. If you file a lot of applications within a short span of time, it will decrease your credit score. If you do need to get several new credit cards, try to spread out the applications a few months apart.