My husband and I bought our current home about six years ago. Back then, the price we paid for our 4 bedroom 2/12 bath home seemed like an enormous amount. Then, the market in Florida went nuts and people in my neighborhood with a house just like mine, were selling for double what we paid. I couldn't believe it! While we were surely tempted to test the market and sell, I thought, "If we sell, what can we afford to buy? What will happen when things begin to cool and people realize they overpaid for their slice of heaven?"

Well, the what ifs are here now. According to a report I saw last week on Good Morning America, close to one million homes are expected to go into foreclosure before the end of the year.

Banks once booming with business are now closing their doors and even the rich are feeling the pinch.

In recent years, people with less than stellar credit were able to secure loans and purchase homes, cars, whatever they felt they needed. Well, those days are just about gone. Lenders are tightening their belts and requesting loads of information from would-be borrowers before they say yes. Now more than ever, it's important to improve your credit score. So what you do to improve your chances of receiving a decent rate on a home or car loan? Take a look.

LOSE THE CREDIT CARD DEBT

Another news report I heard recently said just a few short years ago, banks didn't think twice about lending to customers with higher than average credit card debt - as long as their minimum payments were made. Well, that isn't the case anymore. High credit balances are seen as a major liability and big STRIKE ONE if you are trying to secure a home loan, even if you are paying on time. No matter how many times it's said, it bares repeating, pay down that credit card debt! Believe me, no good can come of it if you don't.

PAYING BILLS ON TIME

You can be sure that lenders are looking at not only if you pay your bills, but if you pay them on time. Late payments are a death sentence to your credit score.

INVEST IN A MONITORING SERVICE

Most credit card companies and all of the credit bureaus offer a credit monitoring service. Take advantage of it. You don't want to wait until you apply for a loan to learn that someone is ruining your credit. Tthe yearly fee (about $100-$150 per year) is well worth it.

KNOW YOUR OWN LIMITS

Banks and lenders have a pretty interesting formula they use to determine just how much house or car you can afford. Don't believe the hype. Understand your own bills and abilities and work from there. If by your calculations you can only afford a car that's $15,000, don't get dillusional when the bank approves you for $20,000. Stick to what you know works best for your own bills. Remember, you don't want to get caught up and end up with a repossession or foreclosure - a major credit score killer.

WAKE UP AND READ

Consumers are entitled to one free credit report per year, and you can get one each month if you are willing to pay a small fee. Take a look at your credit report and make sure everything listed is accurate. Creditors do make mistakes and those mistakes can cost you if you don't pay attention. If you know a debt doesn't belong to you, write the credit bureau and the company reporting the debt to get the problem resolved. If the debt is yours, don't ignore it. Make arrangements to pay it off. How can you expect anyone to loan you money when you have past debts you haven't paid?

DON'T CLOSE CREDIT CARD ACCOUNTS

I know, I know, it sounds a bit double sided right? On the one hand I say pay off your credit cards but then I encourage you not to close the account. Sometimes closing the account can do more harm than good. You don't want to mess up your debt ratio. Let's say you have $20,000 in credit card debt on two cards and you are just about at the top of your credit limit on both. Then, you find some money to pay off one card. You pay off the $10,000 you owe but then you turn off the card. Now, you have one card with a high balance and it appears as though you have no more credit left, making your debt ratio high - you owe more than you have available to borrow. But, if you keep the other card open, your debt raio improves. Now, while you still owe $10,000 you have a credit line of $10,000 that you can draw from (with the card you paid off). Clear as mud right? Just trust me. So, don't close those accounts, but that doesn't mean to charge all over again once you pay it off. Instead, leave the account open but cut up the card.

KEEP GOOD RECORDS

Lenders are asking for more paperwork than ever in recent memory. Keep copies of your bank statements, proof you've paid off outstanding debt, your credit report, last pay stub, etc. Banks want to be sure that you can pay back what you borrow. So have all of the proof handy to show that you pay your bills, work steadily and are a good credit risk.

Getting a loan at a good interest rate isn't impossible, but it sure is a lot harder than it used to be. But, if you keep your credit clean, there are still some pretty good deals out there to be had. Happy Hunting!