Navigating a Credit Crisis: Tips for Preparation and Recovery

During a credit crunch, banks tighten their lending standards, making it harder for households to buy cars and homes or for businesses to hire and expand. To prepare for a possible credit crunch, consumers should ensure their creditworthiness is attractive, pay credit card bills and other debt payments in full and on time, reduce credit utilization rate, and have cash on hand in an emergency reserve. Businesses should try to refinance or roll over loans sooner rather than later. Consumers should also be aware of the FDIC limit and keep their savings within it.