Nov. 13 (Bloomberg) -- Bryan and Trudi Sorge used two credit cards with 0 percent interest rates to pay for a new deck at their Pine, Colorado, home, unaware the transaction would lower their credit score.

``We thought why use the cash, this is easier,'' said Trudi, 47. ``But because we maxed them out, it brought our score down.''

When they tried to refinance their adjustable rate mortgage to a 30-year fixed rate, they discovered they would have to pay $3,185 in fees to get the rate they wanted because of their lower score.

``Having a good credit score in today's environment is more vital than ever,'' said Curtis Arnold, chief executive officer of CardRatings.com, in Little Rock, Arkansas, which offers credit card reviews to consumers. A high score can help get credit, and may lead to lower rates on financial products such as insurance and loans, Arnold said.

Scores between 600 and 649 represent a 31 percent default risk, and scores under 599 mean a 51 percent risk, according to MyFico.com, a division of Minneapolis-based Fair Isaac Corp. which developed the Fico credit score many lenders use. The maximum score is 850.

A score of at least 700 is the goal, according to Carol Kaplan, a spokeswoman for the American Bankers Association in Washington. ``That will guarantee that you have the most likely chance of getting credit, and qualify for the lowest interest rates,'' she said.

Debt-to-Credit

Loans are harder to obtain as banks tighten lending standards in the credit crunch.

``We're taking a more aggressive look at accounts to control for risk given the current environment,'' said Betty Reiss, a spokeswoman at Charlotte, North Carolina-based Bank of America Corp., the largest U.S. consumer bank, which lost $373 million in the third quarter in its credit-card unit.

Consumers can raise their credit score, or avoid having it lowered by maintaining a low debt-to-credit ratio, keeping a good payment record and building credit history.

A debt-to-credit ratio, or utilization rate, measures available credit relative to the amount of credit that's been used. It should be less than 30 percent, said David BarMack, president of National Credit Education Plus in San Diego.

One way to lower the ratio is to spread credit across multiple cards, said Kenneth Lin, chief executive officer of San Francisco-based Credit Karma. ``Don't have one card that shows extremely high utilization with others that have zero utilization,'' he said.

Keeping the utilization rate low may be more difficult now than it was a couple of months ago, said Bill Hardekopf, chief executive officer at LowCards.com, a consumer credit card resource Web site in Birmingham, Alabama.

Reducing Risk

A lower credit limit changes the utilization rate, which can affect credit scores, especially when total credit is reduced to just above an existing balance, said Arnold of CardRatings.

``We're getting calls from people because they had their credit limit reduced, yet they were good payers and counting on that credit,'' said Andrea Ayers, customer management president at Convergys Corp. in Cincinnati, which handles customer service for credit-card companies.

If one's credit limit is cut, call the lender and ask about options, such as opening a new account or transferring part of the balance to a different lender, Arnold said.

Payment history accounts for 35 percent of the total score, outstanding debt is 30 percent, and the length of credit history is 15 percent, according to MyFico.com. New credit and types of credit used each account for 10 percent of the total.

Good Credit

A 724 score is considered good credit and allowing one account to become 30 days' past due lowers the score to 678. Allowing all accounts to become 90-days' past due decreases the score to 660, according to Credit Karma's credit simulator, which predicts how any one of 14 financial transactions affects credit.

Avoid carrying a balance, Hardekopf said. If you have a balance, stop charging purchases on your card, and each month pay more than the minimum balance. ``Paying just the minimum makes credit card companies rich, and makes you poor,'' he said.

A regular spending pattern is also important. Credit card companies monitor consumers' spending, and any significant change can affect a credit score. Maintain constant spending habits to keep a stable credit score, Lin said.

How many lines of credit are open, and how long they've existed can also affect the score.

``Having three to six credit cards is actually a good thing, because it demonstrates that you can use credit responsibly,'' Lin said.

Divorce Challenges

Sindy Rich, who manages a design center in Los Angeles, learned that a divorce can pose challenges to credit history.

``I was ready to shut down all of my credit cards. I figured that would help my score,'' said Rich, 33.

Closing joint accounts and opening new ones may be the first impulse when you're getting a divorce, but that can affect your credit history, which may result in higher interest rates, said Todd Huettner, a financial consultant in Denver, Colorado. He advised Rich and her husband to gradually close the accounts.

``It takes years and years to build good credit,'' Lin said, ``but it takes just a few mistakes to destroy it.''

To contact the reporter on this story: Silvia Cernea in New York at scernea@bloomberg.net.

Last Updated: November 13, 2008 09:17 EST