Managing and Understanding Your Credit

On my way into the city to work this morning, I received a call from my son, he is frustrated. As quickly as he pays down the balances on his credit cards, the creditor reduces his limit to match the new balance. This has happened on a couple of his cards, the more he pays, the lower the limit. He has learned that to raise your credit score, you need to reduce your debt to credit ratio; he feels like he can't get ahead. He works in finance, he pays his bills on time, he has an excellent income, especially for someone his age. The problem is, he has too many credit cards with balances. It is the same creditors today who are systematically shrinking their exposure in consumers like him, who were all too eager to send him credit cards and continuously raise his credit limits when he was in college.

A friend of mine was complaining about another frustrating situation she is dealing with her creditors. She has a couple of credit cards she rarely uses, in fact, she rarely uses credit at all. She has now received letters from two creditors closing her credit cards for "inactivity". She is frustrated as well. She is in the market for a new car, she fears the loss of available credit will hurt her credit score.

We have long been advised to pay down our high interest credit cards before we pay ourselves with savings. What if you are concerned about losing your job, should you rather make minimum payments and stash your cash?

Each of these scenarios is timely in our current economic environment, it seems as though we are in an entirely new credit landscape. Everything we thought we should be doing, or were doing, may not be working out quite the way we had hoped. How will the changes to credit and lending policy your creditors are making today, affect you tomorrow? What can you do to improve your credit profile? MoneyMothers is hosting a "Focus on Credit" discussion to answer these questions and more on June 24, 2009 at 9:00 p.m. ET and 6:00 p.m. PT. Registration information to follow.