A recent survey from the Consumer Federation of America (CFA) found that less than half of Americans (44%) know what their credit score actually represents. Only 29% know how damaging a low score could be.

A credit score does not measure the amount of debt one is in; it represents the likelihood that someone will repay their loans, or the risk that they won't. For example, if someone owns ten credit cards with a present balance of $50,000, his/her credit score can still be very healthy. As long as the person's history shows a majority of payments made on time, he/she may not seem risky to lenders. On the other hand, someone with one credit card and a balance of $500 may suffer from a poor score if he/she received "past due" notices every month.

"Given that the credit score is some indicator of how likely you are to make those payments, it's an important number," said Maury Randall, Rider University finance expert.

Randall said a lousy credit score could cost someone a lot of money. Folks with a score under 620 may not be able to attain certain types of loans, and if they do, they would most likely come along with very high interest rates. For someone with a score of 760 or above, loans would be quite easy to achieve, and at relatively low interest rates.

It is possible to raise one's credit score. Perhaps the most obvious method is to pay bills on time; try not to carry balances from month to month.

"Don't open a lot of new accounts very rapidly," Randall added. "On any debts outside of credit cards, try to make some early payments."

Also, stay away from using the maximum amount available on a credit card (don't max out).

It's important to know that credit reports are not always error-free. One should check his/her report periodically to make sure there are no falsely-negative entries. A decent-sized correction could result in a score change.

The three big credit reporting agencies offer a free copy of one's credit report every twelve months. Click here or call 877-322-8228 for a report. A Social Security number is needed.