Six Credit Crunch Tips

Here are a few concise tips to help you through this credit crunch. (Count on it lasting at least through 2009, and probably into 2010 if no other major events extend it.)

  1. Use your credit, your cash is always good. Credit may be tight, but if you have credit lines and credit cards use them instead of your savings. (Just don’t get late on credit card payments. They’ll eat you alive).
  2. Borrow if you can. That may seem to contradict tip #1, but if you can borrow, do it! Pay back the loan in a short time (six months). Think of the money you spend on interest as an investment in your credit rating.
  3. Don’t over-extend or get cocky and cancel your credit line. If you’re in pretty good shape right now, be careful not to put yourself in a risky financial situation. Even if you don’t need it, hang on to your home equity credit line, if you have one. The bank has probably reduced your maximum because of depreciated home values, but that cushion could be mighty handy if you need it when other credit is tight. What’s more, canceling a loan with a good credit history can actually hurt your credit rating.
  4. Don’t max out your credit line or your credit cards. It makes you look desperate–or careless–and now is not the time to have money people questioning your ability to pay
  5. Keep your borrowings on lines of credit and credit cards at less than half of the available credit.
  6. Don’t borrow short term for long term purposes.

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