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YOU'VE been turned down for a mortgage to buy your dream home. Your bills are piling up. And you're on the brink of bankruptcy.

You're not alone. Consumer debt, which includes auto loans and credit cards but excludes mortgages, hit a record $1.99 trillion in November 2003, according to the Federal Reserve.

Rebuilding your credit is one step toward making order out of chaos, and it takes a serious commitment to live a more moneywise life.

"A good credit rating affords all of us the opportunity to realize the dreams that we all have as American consumers," says Doris McNeal, assistant vice president for the consumer risk operations group at Bank of America in Norfolk, Va. "If you have a good credit rating, you'll have much easier access to the type of house you want to live in, and [it'll be easier to] buy the kind of car you want to drive."

Your credit report could be the determining factor in whether you get that job you interviewed for last week, rent that great apartment or even obtain mandatory car or home insurance.

"What the credit report does is provide a history of how you have handled your finances," says Glinda Bridgforth, founder of Bridgforth Financial Management Group in Detroit and author of Girl, Get Your Money Straight!: A Sister's Guide to Healing Your Bank Account and Funding Your Dreams in 7 Simple Steps. "It's a barometer of how financially responsible and trustworthy you are."

According to Bridgforth, McNeal and other financial experts, the following are six essential steps you should take to start rebuilding your credit:

1. Take a look at what money you have and track your spending--write everything down--so that you can make the necessary changes to free up cash.

2. Create a realistic budget and spending plan. Don't spend more than you can repay, and pay more than the minimum amount due on your credit cards.

3. Rank credit card bills by interest rate, and pay off the bill with the highest interest rate first. If yon have established a three- to four-month history of making payments on time, call the credit card company and ask them to lower your interest rate.

4. If you must carry a balance on your credit card(s), keep it at least 40 percent of your credit limit. If your maximum is $1,000, try to carry a balance of $400 or less.

# posted by Medical Information : 3:40 AM