More than two-thirds of Americans don't even know what a credit score is, says a recent Consumer Federation of America survey. Basically, good credit scores mean you're likely to repay a loan and bad credit scores put you into a high risk pool as a potential borrower, hurting your chances of receiving an offer or even a good deal on your next credit card. Your credit score is based on your payment history, how much debt you have, how much credit you were offered and how frequently you borrow.

The history of identity theft shows us that criminal activity can cause a bad score but the most common way people get poor credit scores is to miss a credit payment or to pay late. At the time you may think, "Who cares if it's just a few days late? They're still getting their money." However, once that lateness or missed payment is reported, a credit score can drop as much as 100 - 150 points according to one leading credit repair attorney and will take 24 months to be fully restored. To remedy the situation, be sure you bring all your credit accounts current, paying off late payments and always paying at least the minimum monthly fee, rather than waiting to pay it all at once. For many people, paying automatically through debit or setting a monthly cell phone reminder a week in advance are the best ways to ensure bills get paid on time.

To manage your credit score and credit card debt, you'll need a plan. Create a chart showing the total balances and minimum monthly payments for all your accounts. Some people pay off the smallest balances in full first to feel like they're gaining ground. Yet it may be more reasonable to pay off the highest interest rate cards first. Get into the habit of paying much more than the minimum monthly payments; otherwise, it could take you 10-30 years to pay off your balances! Also try to avoid making new purchases until your old accumulated debt is paid off. Be aware that getting close to your credit limit will also weigh against you, so you should try to keep your usage at 30% of your total limit, or less. Following these tips will put a damaged credit score back on the road to recovery.

As you may have imagined, companies aren't always diligent about ensuring that credit score adjustments are reported or applied. Many times, consumers are surprised that certain items still appear on their credit report as unresolved! In fact, a 2004 Federal Reserve bulletin stated that 29% of 300,000 credit reports contained accounts with balances more than three months out-of-date. Some creditors don't even report that you make your payments on-time either. If you're preparing for something big, then Experian spokesman Donald Girard advises that you "make the payments several months ahead of time" to allow your "history to stabilize before it is reviewed." He adds that "unusual activity, such as large out-of-cycle payments, is a change in behavior that can be an indicator of risk, even though it is basically a positive action." Keeping your credit balances low at all times is another key maneuver to improve your credit scores, he says.