If a low credit score is limiting your ability to get a car or home loan, there are five basic steps you need to take to raise it.

The process isn't complicated, but requires the basics of discipline and common sense. Remember: There are no immediate fixes and repairing the damage takes time.

"You've got to stop digging the hole before you can get out," says Gail Cunningham, Vice President for Business Relations at Consumer Credit Counseling Service of Dallas. "You've got to freeze your spending. It won't get better tomorrow unless you do something today."

Start by cutting up unsolicited credit card offers that arrive in the mail. Accepting similar deals allows you to run up large balances on several cards and transferring the balances to one card doesn't reduce the amount owed. Worse, the low introductory interest rate on a new card is likely to encourage more spending.

But don't cut up all your current credit cards. There's no need to conduct all transactions in cash. Creditors tend to view someone with no credit cards as a higher risk than someone who has managed a few cards well.

One major bank credit card and one oil company credit card should be enough. Use a debit card when possible because there's a direct link between spending and your bank account.

Leave your credit card at home when you visit the mall. This will eliminate impulse buying. If there's something you need – not just want -- it will be in the store tomorrow.

These steps should stop you from digging yourself into a deeper hole. Here's what you've got to do to rebuild your credit:

Step 1: Get your credit report.

Federal law requires the three major credit bureaus to provide consumers with one free copy of their report each year. To download and print a copy from Equifax, TransUnion and Experian, click to www.annualcreditreport.com, the official Web site for free reports.

Step 2: Pay your bills on time.

You've probably overlooked this basic point in the past – that's one reason why your credit rating stinks. Remember that late payments – or worse, collections – drag down your credit score. So, build a record of timely payments. The longer you make scheduled payments on time, the higher your score. While a good sign for potential creditors, paying an account that's been turned over to a collection agency in full won't remove it from your credit report for seven years.

Step 3: Keep your credit card balances low.

Revolving credit can be seductive and misusing it can be a hammer on your credit score. Potential creditors check how much outstanding debt you carry so pay off existing debt as quickly as possible.

Don't open new accounts in an effort to boost your available credit. Creditors want to know how long your accounts have been open. So, opening a slew of new accounts won't improve your standing and will make you look like a bad risk.

Step 4: Learn from your mistakes.

Oddly, once you're on the comeback trail, you'll find it's easy to backslide because your finances are in better shape. It's much like dieting – mints look manageable after losing 25 or 30 pounds.

It shouldn't be hard to figure out what you did wrong in the past to damage your credit rating. It should be unambiguous what you need to do to avoid similar flubs in the future.

The trick is putting the theory into practice. That requires changing your spending habits and your attitude about saving. To do that, ask yourself a basic question: Do you want credit to work for you in lower rates for a home or car loan or do you want to be a slave to your credit cards, never quite catching up to the balance due?

Step 5: Write a budget – and stick to it.

Your budget doesn't have to be fancy, but should include the basics: Rent, groceries, car payment, maintenance, clothes – and savings.

Keep track of what you spend. You don't have to crank up the spreadsheets – a notebook will do. Label the left half of the page "income" and the right half "expenses." This will help keep spending in line. If you don't know what you spend each month on movies and eating out, your hand-written account will soon provide the answer.

Open a savings account and set aside a pre-determined amount each month. This will force you to cut spending, and that's just what you need to do as you rebuild your credit rating.

Saving is basic to sound personal finance. Some financial planners say 10% to 20% of gross family income should be stashed in savings. Others suggest saving enough to cover household expenses for three to six months.

If you turn your finances completely around, you need to know about the Certificate of Deposit Account Registry Service. (See: "CDARS: Seeing the Forest for the Trees".) 

"If you're hiding purchases from your spouse and having the bills sent to a Post Office box, it's time to talk to a credit counselor," Cunningham said. "Debt follows you everywhere – it's there when you wake up in the middle of the night and it affects your performance at work and damages your ability to be a good parent."