Freezing and rebuilding bad credit

NEW YORK (CNNMoney.com) -- E-mail questions, holiday edition.

I have most of my savings maxed out in FDIC secured savings accounts. How good is the FDIC guarantee? - Lugi, Florida

FDIC means it's backed by the federal government - and that means it's the best financial guarantee you can get.

This "insurance" protects you against the loss of your deposits if an FDIC-insured bank or savings association fails.

And it doesn't matter whether its checking or savings accounts, money market deposit accounts or CDs.

There are limits though - up to $100,000 in each banking institution. Some retirement accounts, like IRAs are insured up to $250,000.

But keep in mind, The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies or annuities even if you purchased these products from an insured bank.

To make sure your bank is FDIC insured, call 1-877-275-3342. Generally you will see a FDIC sign where deposits are received.

For more info, check out FDIC.gov. Let's face it, if the federal government doesn't make good on the FDIC promise, you have bigger problems than losing your money.

Do those debt settlement companies really lower your debt and get it paid off in 3 to 5 years? Please help, I am not sleeping at night. - Mary, West Virginia

Generally we don't advise going to debt settlement companies. These companies may advise you to stop paying your debt immediately.

And this won't only continue to damage your credit report, but you'll still be accruing debt, late fees and interest with your creditor.

Plus, these debt settlement companies often have fees you'll be responsible for.

If you can't create a workable budget yourself or negotiate a payment plan with creditors, your best bet is to chose a legitimate credit counseling organization.

Many state attorneys general have toll free numbers where you can check out such organizations, or call your local Better Business Bureau. You can also check out the National Credit Counseling Agency at nfcc.org.

I had to file bankruptcy in 2003. Now I am a victim of the housing/mortgage crisis. How soon can I file bankruptcy again? - Chris, Florida

It depends on what kind of bankruptcy you filed in 2003. If you filed chapter 7, it will be 8 years before you can file for Chapter 7 again. So you'll have to wait.

However, there is a type of bankruptcy called chapter 13 which you can do right away - this does not wipe away your debt, but forces you to pay it off over time.

Remember, even if you do file again, your credit score is damaged. Bring yourself back from the brink by going to a credit counseling agency.

It's going to be hard to repair your reputation with creditors after declaring bankruptcy twice.

I heard that one of the ways to make money in real estate is to buy a foreclosed property. Should I go for this type of investment? - John

You can make money in foreclosed properties because you're buying at such a steep discount. But there are some serious drawbacks to investing in this type of property.

For example, the tenant may still be in property or you may not be able to see the condition of the property. And there may be other liens against the house that you may inherit as the new owner.

You'll need to be familiar with the laws in your state. To do this, go to the county clerk's office.

To find what properties are being auctioned, you can also check the listings in your local newspaper. Or you can do your research online.

Yahoo has a site for foreclosed property. There are also places online that list foreclosed properties, like foreclosure.net and realtytrak.com.

I am sixteen years old and I'm trying to get my passport for the very first time. How much would it cost? How many days will it take to get my passport? - Emiley, Florida

Well, Emiley, you'll pay $97. If you need your passport quickly, you can apply for an expedited passport. That will take about 3 weeks.

Otherwise, it could take you 4 to 6 weeks to get your passport. Check out travel.state.gov for details.

What is the best way to rebuild bad credit? - Michael

Obviously you'll want to start with paying your bills on time and putting away the credit cards. And it matters. If you have a poor credit score - we're talking something below 620 - you'll face higher-cost loans, more expensive insurance, and possibly even a little discrimination in the job search.

If you're credit problems simply stem from late bill payments - maybe you're forgetful or a procrastinator - automate as much of your bill paying online as possible. That will keep you from missing payments.

However, if you can't cover your monthly bills and use credit cards to make up the difference, it's time to do some soul searching.

Get together your bills and look at your income with a new eye. Is housing just a third of your income or is it more? How much are you spending eating out? These are two items that people typically overspend on.

Put together a budget and try to stick to it. No matter what the source of your money woes are, it makes sense to look at credit reports to make sure that your credit score isn't suffering from bad information.

Check the account numbers. Are they yours? Are you identified correctly? If the information is incorrect, you can contest it by writing the credit rating agency directly. Get your reports at www.annualcreditreport.com.

How can I safely freeze my credit with all three bureaus? - Dave

A freeze is essentially locking your credit file against anyone - lenders, ID thieves - who may be trying to open up a new account in your name.

It's effective, but it can be inconvenient and it's not free. You'll have to mail separate certified letters to each of the major credit reporting agencies, TransUnion, Experian and Equifax, and pay $30 bucks for the privilege.

And if you want to apply for credit, you'll have to unfreeze your account a few days before you apply for any loans. That will cost you another $30 in most states.

A better solution is credit monitoring. A credit monitoring service will alert you when there are inquiries into your account or any new accounts that are opened in your name.

But it's more expensive - $10 to $35 a month. For my money, I do the cheap and easy stuff: get off junk mail lists and shred credit card offers before tossing them in the garbage. I also keep a close eye on my credit card.

Is it good or bad to cancel the credit cards you do not need? - Mohamed

Unfortunately, there's no easy answer here. Lenders look at two things: how much debt you have and how much credit is available to you.

When you close accounts, you have less credit available to you compared to your debt. That can hurt your score. Plus, you benefit from having a long credit history.

On the other hand, if you find that having too many cards tempts you to run up more balances, or you just want to simplify your financial life, closing accounts may work in your favor. You'll have a better sense of your debt levels too.

Gerri, How do we cut down on the amount of "junk mail"? - Katherine

Most of us get at least a few credit card offers and other junk mail every week. But if you want to stop these offers here's where you need to go: optoutprescreen.com. You can also call 888-5OptOut. This is a free service set up by the credit reporting industry.

Once you give this info, you'll be taken off mailings for five years. As a note, if you signed up for this service more than five years ago, it's time to re-register.

If you want your name removed from Direct Marketing members - this may include businesses in your community, coupons or catalogues - go to DMAchoice.com.

You'll have to pay a one-time fee of a dollar. But that's a small price to pay.