ife is full of surprises. Trouble could be right around the corner. Would you be able to handle a financial crisis? This section explains how to prepare for financial difficulties. You'll learn to recognize the warning signs of credit problems. You'll also learn ways to cope with a financial crisis.

If you have credit problems now or have had them in the past, this section provides tools and advice for getting back on track and restoring your credit.

As you may know, financial problems, if not handled well, can have a long-term and negative effect on your credit history. It's important to prepare now for potential problems later.

Most financial crises occur because of something beyond your control:

• Maybe your company is getting ready to lay you off. You wouldn't know that in advance.
• Maybe you get sick and are unable to work for a period of time.

You can't really control these things, and, in most cases, you can't prevent them from happening. What you can do is:

• Manage your finances well.
• Keep your credit in good shape.
• Save money for emergencies.

But what if your credit isn't in good shape when you get sick? What if you don't have savings when you lose your job? What then?

Before you start to panic about financial disasters that haven't yet happened, learn how to read the warning signs of credit problems.

Learn how to prepare for and cope with a financial crisis before it occurs – and how to live through a crisis if you're already in one.

If you can recognize the warning signs of credit problems, you can do something about it. Take an honest look at your financial management patterns to recognize the warning signs. Ask yourself difficult questions and give honest answers.

• Are you consistently charged late fees on all your bills?
• Is it hard to decide which bills to pay each month?
• Are you only able to buy groceries by using your credit card?

• Do you spend more than 20% of your net monthly income to pay for your credit cards?
• Have you ever borrowed money to make payments on existing loans?
• Are your credit cards maxed out most of the time?
• Do you have so many credit cards that you can only pay the monthly minimum?

• Have you ever put off something important, like going to the doctor, because you didn't have enough money?
• Do you work a lot of overtime or have a second job just to pay your basic living expenses?

If you answered yes to any of these questions, you're not alone. You probably have friends or family members who've been in some of these situations. You might even know people who've struggled to stay afloat financially their whole lives.

It's easy to fall into the trap of financial instability. But, while it may seem difficult at first, it's not impossible to get yourself out of the trap. Start by learning how to cope with your financial crises. Then you can find ways to climb out of the trap, achieve financial stability and restore your credit.

When something unexpected happens, you might feel too overwhelmed to do anything. But if you learn how to cope with the situation, you can handle anything. Remember to keep calm.

Free counseling services are available through credit counseling agencies. Keep in mind that it's easier to manage a problem when it's still small.

Let them know you're having financial difficulties. They can't help you unless you tell them your situation. You'd be surprised at how helpful they can be during a crisis.Work with your creditors to get on a payment plan. You might even be able to restructure your debt.

Don't make promises you can't keep. If you really can't afford to make a payment until next month, tell the truth.

It might take longer than you predicted for your financial crisis to go away. Be persistent with your creditors. Establishing a good relationship will get you farther than running away from your obligations. This is very important - your future financial stability is at stake. As a member of Our Smart Credit Report®, you can use our tools to negotiate debt reduction directly with your creditors.

As you start to pull yourself out of the financial crisis, remember to set aside money for savings. This will give you a cushion for financial crises in the future. Then you'll be on the road to financial health.

You are responsible for the accuracy of your credit report. Find out what's in your report and take action to correct errors on your report.

• Make a financial plan to achieve your goals and objectives.
• Get the right checking and savings accounts for you.
• Get the right credit cards for you.
• Be credit wise, get only the credit you need, and don't overextend yourself.
• Save Money

Follow these steps to get your credit back on track:

• Make a list of all the debts you owe, including creditor names and addresses.
• Prepare a realistic budget.
• If you're overdue on any bills, contact your creditors right away.
• Be diligent about monitoring your credit report. See our website at www.smartcredit.com to see the full range of options you can choose.
• Consider selling some of your assets with cash value.
• Consider getting a second job to pay off your debts.
• Consider other sources of money, such as borrowing from your retirement account (as a last resort).

After completing these steps, there are still more things you can do:

Contact former creditors with whom you had a good payment history. They may be willing to re-establish a credit relationship with you.

Secured loans are tied to collateral, such as real estate or cars. Remember that if you default on a secured loan, your collateral may be repossessed.

This credit is tied to a deposit in a bank account. You can charge up to the amount you deposit. Verify that the bank issues reports to the credit bureaus.

A co-signer is a person who is willing to sign with you on a credit or loan application. In the event of nonpayment by you, the co-signer becomes responsible for the debt; both parties' credit ratings are affected.

Try to avoid "introductory" or "special offer" interest rates. READ THE FINE PRINT.

Restoring your credit takes dedication, patience and time.