Out of all of these people 16% missed their payments or exceeded payments. The majority were labeled as ‘good’ customers because they were able to pay their bill in full each and every month. More than half of the people stated that they were making at least minimum repayments.

Uswitch said: “Credit card providers are taking drastic action to manage bad debt.The question is whether providers are simply trying to reduce risk and indebtedness, or whether they are just trying to filter out less profitable customers.”

Simeon Linstead, head of personal finance at uSwitch.com, said: “We’re not against credit cards providers curbing consumers’ spending if their debts are genuinely getting out of hand. However, credit card companies who are taking action to close down or make changes to customers’ accounts must be completely open about how and why they have selected those customers.”

According to APACs, the industry body for credit card firms, 21.4 million credit cardholders regularly or always pay their bill in full out of 31 million credit card accounts in total.

Mr Linstead said: “These customers are the least profitable for a credit card company to have on its books unless they withdraw cash, use their card overseas or get caught out by the order of repayments. They will not be contributing much to the £6.186 billion in interest made by the credit card industry last year.”

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The Fair Credit Reporting Act states that you have the ability to question anything that is on your report and you can tell them to give you proof. Once you inquire an investigation will begin in which the company in question will have a certain amount of time to reply back to you with the necessary information.

If they do not reply or they cannot find anything then the discrepancy will be removed from your credit as if it never happened.

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The research is more evidence of the clampdown by credit card companies on customers who they fear may not be able to repay debts. Sean Gardner of MoneyExpert.com, said: “Overstretched consumers might look to resort to credit in a bid to make ends meet but they should not rely on it as a way of keeping spending. Credit card companies are becoming stricter in who they lend to and the amount of money their customers can borrow.

“The credit card market is very competitive as people turn to interest-free deals to tide them over some tough economic conditions. And there’s nothing wrong with taking advantage of a zero per cent credit card as long as spending is controlled. “The warning lights should be shining brightly however if you find you’re going from card to card without making a dent in the amount you owe. If you don’t have a repayment plan in place it is time to get one.”

According to the MoneyExpert.com figures, 4 per cent of all British adults have had their credit limit cut in the past six months, amounting to around 1.8 million customers. Typically customers who had their credit limits reduced saw their limit cut by £500 or less. And the MoneyExpert.com research shows that almost half of credit limit cuts are no more than £1,000. But with some 15 per cent of those experiencing reductions having their spending limits cut by more than £2,500, the average reduction is £1,680.

Sean Gardner added: “Our Switching Index shows that around 980,000 people switch credit card provider each month. With so many people needing credit, you have to wonder whether they are managing their money well or merely papering over some serious financial cracks. “However it is almost always the case that you will save money by switching to a new credit card.

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Here are a few tips to know what you need to do in order to get something completely wiped off your record. These are tips that most people never know about:

1. Each item on your credit report must be proven or it cannot remain in the report. If the credit bureau cannot verify the item when investigated, it must be removed from your file whether or not it’s true.

2. Every negative entry on your report can be denied or challenged at any time. The bureau must reinvestigate and if that item cannot be verified within a “reasonable amount of time”, it must be removed from the file.

3. Items when challenged can be mistakenly erased. Consumers say they often experience computer operator mistakes.

4. Many times the creditor does not re-verify in time or the credit bureau is busy and does not handle your dispute properly. It must then be deleted.

5. The older an item, the more difficult re-verification is. It is possible it cannot be verified because records may no longer exist after 1 or 2 years.

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Directors from Citigroup, UBS, Deutsche Bank and Goldman Sachs said they could not have foreseen the credit crunch. But MPs said they were “in denial” about the scale of mounting losses. The banking industry’s financial exposure to US mortgage-related debt - whose value has plummeted as the housing market has slumped - runs into many billions of dollars. The heads of Merrill Lynch and Citigroup, two of the world’s largest banks, resigned last month after both revealed escalating losses from such investments.

But appearing before the Treasury Select Committee, bank bosses said these losses had been caused by wider problems in the US economy and not the banks’ actions. “The events we have seen over the last few months are the result of things which have happened in the economy….things which are not the fault of bankers.” said Lord Aldington, chairman of Deutsche Bank London.

MPs, who are looking into the state of financial markets in the aftermath of the Northern Rock crisis, said banks had become involved in “opaque” and “complex” trading in mortgage-related debt whose risks they did not understand. “It seems you are flying in the face of reality”, John McFall, Labour chairman of the committee, told them.

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The first evidence was the announcement by the biggest U.S. banks that they are banding together with the government’s blessing to try to bail out institutional customers — and maybe themselves — stuck with illiquid asset-backed investments. That’s a clear indication that there has been little relaxation in the paralysis gripping debt markets in recent months.

Then Standard & Poor’s made another sweeping downgrade of the credit ratings on mortgage-backed securities worth some $23.35 billion, or €16.34 billion — this time for loans granted since the first of the year, a sign that loose lending standards lasted far longer than many thought. More trouble also surfaced on the housing front, with construction of new homes plunging to the lowest level in 14 years and home builders’ sentiment falling to its lowest on record.

Even the stock market took a pause from its recent bullish run, with investors tempering their buying on concerns that the credit and housing mess would lead to a contraction in third-quarter earnings for the first time in six years. Why else would a consortium of banks — including Citigroup, JPMorgan Chase and Bank of America — be uniting with a plan to keep the housing-related debt crisis from worsening. If they thought conditions in the credit market were about to improve, would they be gathering as a group?

The banks have proposed creating a fund that will buy around $100 billion in debt from structured investment vehicles, or SIVs, in an attempt to break the logjam in the market for short-term debt instruments that hold mortgage-related assets. Banks sponsor the SIVs, contributing longer-tem assets like mortgage-backed securities to the investment vehicle.

The SIV then sells unsecured commercial paper or other forms of short-term debt at low interest rates to the likes of hedge funds and money-market mutual funds hungering for a few extra basis points of yield. Those proceeds are then used to repay the sponsor for its investment.

Accounting rules do not require the SIVs to appear on bank balance sheets, even though they create, run and generate fees from them. But if debt markets seize up and the SIV can’t repay or roll over the commercial paper debt when it comes due, the sponsor then is expected to come up with cash to cover the SIV — or face a big blow to its reputation. For the banks, helping the SIVs could lead to big losses as they are forced to mark down the value of the now-shunned asset-backed securities.

The goal of the new bailout fund is to prevent that from happening. Its plan is to sell short-term notes to investors and then use the proceeds to buy distressed securities from the SIVs that otherwise would have to be sold at fire-sale prices. Eventually, they will try to sell those securities to investors. The fund’s backers are spinning this as a way to save the market from more meltdown, but it really is nothing more than a shell game to try to rescue them from the mess they got themselves into.

It is not even clear if that will do the trick. Given the complexity in valuing the SIVs illiquid securities, there are lingering questions over what price the banks will place on the debt and whether investors will be willing to bite. The fund’s backers also say that they will only buy highly rated assets, a promise investors should be wary of since they’ve seen massive downgrades of the ratings on mortgage-related debt that wasn’t supposed to be risky.

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But there is a way to keep everything straight. Losing your good credit is something that you cannot let happen. And if you play your cards right then you won’t let it happen. Not only will bad credit make it hard for you to recieve anything in the future, but it can also make it hard for you to get a new job. Some employers look at a person’s credit history to determine their decision.

One of the first things to do when you lose your job is to cut expenses as much as possible. Take a good, hard look at what you spend each month and figure out what is necessary and what isn’t. In addition, some advisors recommend actually using credit cards in the short term instead of cash as a way to keep much-needed cash on hand. For such cases, credit cards should be used for necessities, like living expenses.

This advice may be somewhat surprising, since it is usually recommended that consumers not pay for essentials with plastic. But when you are out of work, paying with credit enables you to protect the bulk of your much-needed cash while continuing to make minimum credit card payments for longer, which can protect your credit rating. The reason for this is that you don’t want to run out of cash, since having to get cash advances can be very expensive and can also make you seem more risky to lenders.

Keep in mind that the strategy of using credit cards when you are unemployed should just be a short-term solution. Once you find a new job and start to earn money, you will want to attack your credit card debt ASAP. Another strategy to employ when you lose you job is to clean up your credit report as much as possible by disputing any inaccurate or outdated items. Since good credit can help you land a job and keep down borrowing costs, a clean credit report is especially important when you are out of work.

In terms of letting credit card issuers and other lenders know about your job loss, it makes sense to wait until you are actually unable to make payments. If you get to this point, ask creditors for a hardship program that will allow you to make lower payments, generally for only three to six months. Should you be unable to make payments even under a hardship program, or if you cannot get enrolled in one, then you should inform lenders that you cannot make payments until you find work.

Either consider finding a reputable credit counseling agency, or write your creditors to let them know you will resume making monthly payments as required in your cardholder’s agreement once you get out of your tough situation. Since it’s always better to be prepared ahead of time, even if it doesn’t seem like a job loss is in your future, try to keep savings on hand for about six months of living expenses and don’t carry large balances on your credit cards.

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Home equity credit line is a great way to use the equity in your home to finance big ticket items such as home improvements, paying off high-interest debt, financing a car, or paying for college tuition. A credit card is a revolving line of credit that you use when you need it, and make payments only if you use it. But credit cards can charge very high interest rates.

A home equity line of credit (HELOC) is also a revolving line of credit. You draw from it again and again as you need it, and make payments only if you use it. But, unlike most credit cards, you get a much lower interest rate with a home equity line of credit than with a credit card. Using a home equity line of credit is a way to turn bad debt into good debt. In other words, the interest on the debt you have on your high-interest credit card cannot be deducted from your taxes. But the interest on your HELOC is usually tax-deductible.

There is also flexibility that can be built into home equity loans that you wouldn’t get for say, an auto loan. There are different home equity programs that have an interest-only option. With an interest-only loan, you can pay only the interest for a pre-determined amount of time and pay as much principal as you want, even none. You can’t do that with an auto loan. Most lenders offer home equity lines of credit for up to $100,000.

It’s fairly easy to get a home equity line of credit. That’s one of the best things about it. Nowadays, many companies allow you to apply online and close within a very short period of time, 7-10 days typically. There’s less paperwork to deal with, the closing costs  are less expensive and the process is just as easy as applying for a credit card. If you get a home equity line of credit at the same time as your first mortgage  with the same lender, you only have one closing to go to for both loans.

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Maybe you still don’t have any credit. One thing that people prefer to do to put their minds at ease is to obtain a free credit report, which can easily be done on the internet. The best companies to use are Experian, Transunion, and Equifax.

Of course once you get that report you may find it difficult to read and understand. There is so much information and numbers and things that you have never seen before and therefore are utterly confused. First off, every credit report is split into four sections. The identifying information, the credit history, the public records, and inquiries.

The identifying information is just that, information to identify you. Look at it closely to make sure it’s accurate. It’s not unusual, for there to be two or three spellings of your name or more than one Social Security number. That’s usually because someone reported the information that way. The variations will stay on your credit report. Other information might include your current and previous addresses, your date of birth, telephone numbers, driver’s license numbers, your employer and your spouse’s name.

The next section is your credit history. Sometimes, the individual accounts are called trade lines. Each account will include the name of the creditor and the account number, which may be scrambled for security purposes. You may have more than one account from a creditor. Many creditors have more than one kind of account, or if you move, they transfer your account to a new location and assign a new number.

The entry will also include, when you opened the account, the kind of credit (installment, such as a mortgage or car loan, or revolving, such as a department store credit card), whether the account is in your name alone or with another person, total amount of the loan, high credit limit or highest balance on the card, how much you still owe, fixed monthly payments or minimum monthly amount, status of the account (open, inactive, closed, paid, etc.), and how well you’ve paid the account.

Some reports are incredibly easy to read and understand. They will state in plain words if they are still collecting payments, or have finished collecting. Other reports use payment codes ranging from 1 to 9; an R1 or I1 on a report is an indication of a good payment history on a revolving or installment account.

The next section is the part you want to be absolutely blank. The public records section is never a good story. If you have a public record on there, you’ve had a problem. It doesn’t list arrests and criminal activities; just financial-related data, such as bankruptcies, judgments and tax liens. Those are the monsters that will trash your credit faster than anything else.

The final section is the inquiries. That’s a list of everyone who asked to see your credit report. Any time anyone gets into the report, it’ll post an inquiry. If you call the credit bureau and ask for a copy, it will be on there. It’s a very detailed entry record. It’s great for the consumer. Inquiries are divided into two sections. “Hard” inquiries are ones you initiate by filling out a credit application or taking your child to the orthodontist. “Soft” inquiries are from companies that want to send out promotional information to a pre-qualified group or current creditors who are monitoring your account.

You may have heard that a large number of inquiries can have a negative impact on your credit score, but you’re probably OK. Most of the inquiries are ignored by the FICO scoring models. For example, the model has a buffer period that ignores inquiries within 30 days of getting a mortgage or a car loan. It also counts two or more “hard” inquiries in the same 14-day period as just one inquiry.

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Most people beleive that they have to wait for their credit to repair itself. Yet, there are other ways to fix it, there are quicker ways. There are at least 5 tips that you can use to help repair that damaged credit. First you need to be careful as to how many active credit cards you have at the same time. Having too many credit cards will hurt you and you will find it difficult to pay them all of. The fewer the credit cards the easier it is to pay them off and the better your credit will be.

Next you need to stay on top of your credit report. Each credit reporting agency offers a free copy of your credit report once a year. Take advantage of this offer to stay on top of your score and use it to see where you need to make things right and keep you safe from identity theft.

Remember you need to keep your debt to balance ratio low so you can ensure that you have a higher credit score. Your credit score will get worse with the higher your credit balances get. The higher your score is the more it makes you look like you can not fulfill your financial obligations.

You should always make it a priority to make your payments on time, no matter where you are with your finances. Any accounts that you have that are past due will show as late on your credit report. If you have a problem meeting your payment deadline then you should call your creditor ASAP to make an arrangement as this will save your account from being reported to the credit agencies.

If you have a family emergency such as a family illness or a death in the family then send a letter stating this immediately to your creditor and this will be added to your credit score allowing your creditors to see your personal situation. Fixing your credit score doesn’t have to be a difficult task. With some sound tips to repair your credit score, you will be well on your way to a better future.

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