Editor’s note: Bob Mullins is a certified money management volunteer at Bend’s Consumer Credit Counseling Services of Mid-Oregon. His column offers personal financial advice to Central Oregonians.

This column is the second in a two-part series about understanding your credit card agreement.

Once you get that shiny new credit card, you’re going to want to take it for a spin, but be careful.

If you thought reading that application was tedious, just wait until you get the actual credit card agreement. It will likely be more than 30 pages of boring legal jargon, but trust me — you want to pay attention to all of it because these are the playing rules for using your credit card.

You may not want to adhere to my rules for credit card usage, which include paying the balance off every month, but you do want to pay attention to the credit card company rules. In addition, you may want to impose some rules of your own so that you don’t get into trouble, especially if you’re trying to improve your credit score.

According to Fair Isaac Corp., 30 percent of your FICO credit score is based on your debt-to-available-credit ratio (your balance divided by your line-of-credit). If your credit card has a $1,000 line of credit and you charge more than $300, you run the risk of lowering your credit score (if that is the only credit you have).

The FICO model has determined that the greater your debt-to-available-credit ratio, the more likely you will default on your financial obligation, so the credit score will begin to drop once that level enters the danger zone. At 30 percent, it will drop a little, but the credit score will gradually decrease more and more as the ratio gets larger.

Let’s look at a more realistic example: You owe $10,000 on that car you bought three years ago, and you’re still paying off $10,000 of your student loan. You have three credit cards with a $2,000 balance and a $5,000 line-of-credit on each. Add everything together and you have $26,000 of debt and $35,000 of available credit. That’s more than 74 percent of debt to available credit. You can see how easy it is to get in over your head. Yet when compared with many people today, that example is still quite low.

Reading the statement

You need to read your statement each and every month, and pay attention to those change notices that the credit card company sends you with ever increasing frequency. At this time, credit card companies are able to change the terms of your agreement unilaterally. You need to understand these changes, because they can and will affect you.

A very important change that has been gradually implemented during the past few years involves increasing your minimum payment, which used to be 1.5 percent to 2 percent of your balance, to closer to 4 percent of that balance. It’s important for you to realize that this change has been coming about since the end of 2005, and that it isn’t some conspiracy by the credit card companies.

Realizing that people were getting into situations where they would be paying for their credit card debt for decades, federal regulators developed some guidelines for credit card payments.

They suggested that credit card companies needed to establish minimum payments that would require that people pay all fees, interest and at least 1 percent of the principal balance on their cards each month.

This way, instead of paying on a credit card for decades, people would pay off the balance within seven to 10 years. This change is intended to save you money, but in the short run it makes borrowing money more costly.

Other important changes that I’ve noticed in the past few months include: increasing your annual percentage rate, reducing your credit limit, changing your payment due date (they always make it sooner) and reducing your grace period.

In addition, you may see changes to when a late payment will trigger the default rate, which is the highest rate the company will charge you, and this can be as early as one day late or a full 30 days late.

How can these changes affect you? If your minimum payment is increased, sometimes by more than 100 percent, you may find it difficult to meet your obligations.

If your APR is increased, then your cost of borrowing gets more expensive. If your credit limit is reduced, then you run a greater risk of exceeding that limit and incurring an over-limit fee, and you may find that your debt-to-available credit has exceeded 30 percent and is in the danger zone.

A change to your due date may cause you to be late with a payment, especially if you’ve had the same due date for quite some time, and that could cost you as much as $39, according to the most recent Credit Card Agreement I received from MBNA, which services one of my VISA credit cards.

As for a reduction in your grace period, which usually comes with a new due date, that will only affect you if you regularly pay your balance in full. The grace period is that time — usually 20 to 30 days — between the date of your statement closing and the date by which you must pay your balance in full, to avoid a finance charge on purchases.

The important thing to remember is that you can get better terms on your credit cards, but the only way you can do so is to read those applications, statements and change notices.