Protect your credit in a downturn

Your game plan:

• Transfer a high-rate balance if you can. If you do carry a balance and your rate has skyrocketed or your credit limit has been lowered, check to see whether another of your cards has a low-rate balance transfer offer you can use. If not and you have good credit, search for low-rate offers on MSN Money or sites such as Bankrate.com, CardRatings.com and CreditCards.com. Read the fine print carefully and understand the details, including exactly when the low rate expires, before you move your debt. Use the low rate to help you pay off the debt; don't keep bouncing it from card to card.

• Try to keep your oldest and highest-limit accounts active. Accounts that aren't used cost issuers money, but shutting them down may hurt your credit scores and reduce your access to credit in an emergency. One tactic to keep your accounts active is to charge some small amount to them monthly and then have the balance automatically deducted from your checking account.

• Have more than one credit card available. Having access to a line of credit can help you survive a prolonged financial setback, as I wrote in "The $0 emergency fund." With lenders freezing some home-equity lines, credit cards may become your supplement to whatever emergency fund you've accumulated.

Conserve your cash

Speaking of emergency funds, there's nothing like a big fat pile of savings to help you through a bad time. It's never too late to start accumulating one. Some ideas of where to find the money:

• Use your income-tax refund.

• Fix your withholding for the rest of the year so you get bigger paychecks; set up an automatic transfer to whisk the additional money into savings.

• Stop making extra payments on mortgages and student loans and funnel that money into savings. If you have a home-equity line of credit that may be frozen or trimmed, think twice about paying down the balance, because you may not be able to access that credit again in an emergency. (Read "Lenders cut off the home-equity tap" for details.)

• Host a yard sale or sell stuff on eBay or Craigslist.

• Get a second job.

• Trim your expenses: Drop cable, eat at home, carpool or take public transportation. MSN Money's Smart Spending blog can help with ideas.

Be cautious about adding to your overhead

Every bill or debt you add now may be one you'll struggle to pay should you lose your job.

Businesses will do their level best to convince you otherwise. Desperate for sales, they'll offer deep discounts and low-rate financing. Unless your job is rock solid, your emergency fund substantial and your expenses already low, you probably should resist the urge.

Have a Plan B

If you lose your job or start struggling to pay your bills, visit MSN Money's Debt Management Decision Center for help and tips. Here's what you can do to try to save your credit with different types of borrowing:

• Contact your mortgage lender. The earlier you act, the better your chances of avoiding late payments or, worse, a notice of default -- the legal notice that starts the foreclosure process and devastates your credit scores. Also contact a HUD-approved housing counselor to review your situation and discuss your options.

• Get a student-loan forbearance or deferral. You may be able to get a reprieve from payments, although interest typically continues to accrue. Facing a bigger balance is better than defaulting, however, and the breathing room this gives you can help you pay other bills.

• Sell or refinance your car. If your auto-loan payments are too high, you may be able to refinance to a lower payment if you have equity. Another option: Sell it and use the equity to pay cash for cheaper wheels. If you owe more than the car is worth, you may be able to persuade a credit union to lend you money to make up the difference. (Read "How to sell a car you don't own" for details.)

• Deal with your credit cards. If you're in danger of falling behind on your credit card payments, make an appointment with a legitimate credit counselor -- for example, one affiliated with the National Foundation for Credit Counseling -- to see if you might benefit from a debt repayment program. Credit counseling itself doesn't affect your FICO credit scores, although it may have other repercussions on your credit, as I wrote in "The consumer's guide to credit counseling." Still, the effect is less severe and long-lasting than default, bankruptcy or debt settlement.

Finally, if you're really up against the wall, read "How not to pay your bills." If you can't meet all your obligations, you should understand the repercussions and how to minimize the damage. Once you're back on your feet, "Bounce back fast after bankruptcy" offers strategies for restoring your credit after a financial meltdown.

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated March 12, 2009

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