If you want to get a small business loan, buy a house or make another large purchase, you need to curb your existing consumer debt. The rule of thumb is to have at least 80% of your credit lines available when you apply for a large-scale loan.

Lenders believe that if you have a large amount of consumer debt, you're at high risk of not being able to repay. The organizations that calculate credit scores often think the same thing and adjust them accordingly. Solution? Pay down that debt before trying for a new loan.

1. Learn the difference between "good" consumer debt and "bad" consumer debt.

2. Research consumer debt information and see if you can kick the debt on your own.

3. Talk to a consumer debt consultant if you need extra help.

Action Steps
The best contacts and resources to help you get it done

Distinguish between good and bad consumer debt

Some types of consumer debt should concern you more than others. For example, a mortgage loan or student loan is considered good debt, since it is actually an investment. Your home will likely appreciate and your education can help you get a better job in the future. However, bad debt, such as credit card balances, is different. If you're like most people you use your cards for things like groceries, meals out and vacations. So you end up paying interest on things that have no lasting value.

I recommend: Read CNN Money's article on controlling debt for more details on the different types of debt. Then visit CardTrak. There, you'll learn that the average american with a credit card owes about $6,000.

Of course, the best advice on how to deal with consumer debt is to pay it off. Start with the card w

Of course, the best advice on how to deal with consumer debt is to pay it off. Start with the card with the highest interest rate and make the minimums on the other cards. Then, when you have that one paid off, begin with the next card. However, if you have say $20,000 of credit card debt, this can be easier said than done.

I recommend: Visit The Motley Fool for more strategies on how to better manage your debt on your own. If you think you need assistance, contact the National Foundation for Credit Counseling for help with consumer debt training or see if your bank offers financial counseling services. Be sure to read MSN Money's article on the top three worst consolidation moves so you don't get caught up in a scam.

Cut spending to help with your consumer debt

There's no point trying to pay down your consumer debt if you're accruing more at the same time. It's like taking two steps forward and three steps back.

I recommend: Go to BetterBudgeting and print out a budget worksheet so you can plan your spending in relation to your monthly income. Make sure to include your credit card payment in your list of expenses. Once you have your budget made up, read Bargaineering's article for advice on how to stick to it.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Once you've got your consumer debt paid off, cut up those credit cards, or at least stick them in a drawer.