How Your Credit Score Affects Your Future

The ability to purchase a home, buy a new card, or obtain additional credit cards depends largely on your FICO score. How your credit score affects your future is contingent upon whether or not you maintain certain criteria.
Paying bills on time and/or in full, not carrying too many credit cards with large balances, and keeping the amount of credit card debt below the 25% mark are the factors the three credit report agencies (Experian, Trans Union, and Equifax) view to determine your credit score.
For example, if your credit score is in the 300 range you may not be able to buy a car, purchase a home, or apply for additional credit. If you have missed payments, made several late payments, have been unemployed for periods of time, or have not use more than 80% of the total amount of credit available, your score will remain at a lower number.
There have been many myths to say that the more credit cards one may have, the higher FICO score one will receive. The truth is, if you own and use multiple credit cards, there is a domino effect that comes into play - meaning that when you apply for more credit cards, the credit report agencies will make inquiries concurrent with those applications.
Thus, whether you use the cards or not, an assumption will be made that a financial problem may exist in that you are using the cards as a means to borrow from Peter to pay Paul.
This does not bode well with the credit report agencies and your score will incur a significant decrease. Moreover, if you have multiple cards that have been used to the max, this shows that you are not responsible in handling your financial affairs and can hurt you if you do need a loan some time in the not to distant future.
Conversely, lenders look at your payment history and decide if you are a good candidate for additional credit. If your history is good, your score will increase. Another consideration is the length of time you have had credit. If you have maintained good credit over a considerable number of years, your score will reflect it. This is also why it is important not to cancel those credit cards which you have established and maintained over a period of time. If you cancel, you are wiping out all of the credit successes that have brought you to an excellent FICO rating.
While we are living in a time wherein the economy is in a downturn, food prices have skyrocketed, gas prices have surged, and record number of homes are in foreclosure, it is important for all of us to embrace a more prudent course of limiting the amount of expenditures and paying down as much credit card debt as possible. In this way, we can all ensure that our credit scores remain high and do not ultimately affect our future in a limited manner.