THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FREDRICKA WHITFIELD, CNN ANCHOR: Pope Benedict in New York, saying he will remain close to priests and nuns as they deal with challenges created by the clergy's sex abuse scandal. The remarks came this morning during a Mass attended by thousands at St. Patrick's Cathedral. Right now the pope is getting ready for a parade down New York's 5th Avenue.
A Texas judge has ruled hundreds of children removed from a polygamist ranch will remain in state custody. The judge also ordered court DNA tests for all 416 (ph) children taken from the Texas compound. The test will determine the children's biological parents.

Child welfare officials say they have had trouble identifying the parents due to elusive or changing responses during the interviews.

And shake, rattle and roll caught on store surveillance here in West Salem, Illinois, during yesterday's Midwest earthquake. The magnitude 5.2 quake rocked skyscrapers in Chicago and was felt as far south as Atlanta.

A Chinese ship loaded with weapons for Zimbabwe is looking for a place to unload the cargo, perhaps in Angola or Mozambique. South Africa's high court ruled the cargo could be offloaded in port of Durban but could not pass over South African roads in order to actually get to Zimbabwe.

Right now Zimbabwe, a partial recount of ballots for a couple of dozen legislative seats is under way. The result could overturn the opposition's landmark victory in general elections just three weeks ago. Officials have still not announced results of the presidential vote, it is believed longtime leader Robert Mugabe lost that election.

We'll update the top stories at the bottom of the hour. Time now for YOUR MONEY.

VELSHI: Welcome to YOUR MONEY, where we look at how the news of the week affects your wallet. I'm Ali Velshi.

Today, we have got a special, "Debt Free Forever." Coming up, from mortgages to car loans to college loans, we will help you figure out what's good debt, what's bad debt and how you can pay it all off.

Plus, how your shopping past dictates your buying future. We will break down credit scores and what you can do to raise yours.

And your questions on credit and debt, we will answer your e- mails and get you back on the right track. But for American consumers, a 20-yeet debt spree and a buying binge might be coming to an end. Gas prices, as you know, show no signs of cooling down, and that is sucking billions more directly out of the pockets of American consumers.

Americans' homes are not longer their cash machines. In fact, many Americans owe more on those homes than they own and they have bled them dry of equity. The rising food prices are putting a strain on family budgets across the country.

Our Christine Romans has a closer look.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): The party is over. Americans gorged themselves on debt for two decades. They bought ever-bigger houses, and they spent with abandon at Wal-Mart and the mall just as U.S. trade policy allowed our ports to be flooded with cheap imported goods. And how did they pay for it? By opening credit cards, Americans hold four cards each on average.

And by taking money out of their homes. As home prices rose, Americans borrowed $1.1 trillion in home equity loans. Lenders peddled ever more exotic home financing, and the amount of money Americans borrowed from their homes soared more than 1,700 percent over the last decade.

And a housing crash means Americans are tapped out, at the same time basic costs are rising. Of course for many, it was never really much of a party.

TAMARA DRAUT, DEMOS: I think if you ask the typical American consumer, they would gladly trade the iPhone and the iPod for a decent affordable health care plan or for cheaper college tuition. We have been sold that the quality of life is so much better because we have all these great gadgets that are relatively inexpensive.

ROMANS: At the same time, especially in parts of the Midwest, manufacturing jobs have disappeared at an alarming rate.

(on camera): A generation ago, a full-time worker could support a middle-class family, today, it takes two incomes, that's according to government statistics. In the short run, this downturn means belt tightening for American consumers, but ultimately it could mean lower living standards.

Christine Romans, CNN, New York.

VELSHI: And Christine is not with me, because she has just added, in the business terminology, a new dependent to her household. Christine is now the proud mother of a second little baby boy. We wish you well and we miss you and come back soon.

From credit cards to mortgages to student loans, as Christine says, we are a nation in debt. But how did we get here and more importantly, where are we going? For answers to those questions, let's turn to Robert Manning from the Rochester Institute of Technology.

Robert, good to see you. Thank you for being with us. How bad is this? I mean, is it really -- would you call it a horribly unique situation in American history? Is that true?

ROBERT MANNING, ROCHESTER INSTITUTE OF TECHNOLOGY: Well, this is truly a unique situation, Ali. I mean, in the last five years we have literally seen the economic laws of gravity suspended. And by that I mean in the late '90s real household income was rising in the historic norm and growth of housing prices really retained a stability, but after 2001 housing prices, of course, doubled in most metropolitan areas while home household income actually declined.

VELSHI: Tell me -- explain why did household income decline? I mean, I don't talk to most people who say that they have had negative wage growth. They got little increases, maybe they didn't keep up with inflation, but how did that actually happen? Why did wages decline?

MANNING: Well, what is striking of course is that with globalization, what we are seeing is more and more outsourcing around the world, and as wages have become stabilized and we are seeing inflation rising, the overall cost of living as we saw with housing just took such a huge chunk out of people's paycheck that they had to start turning to other sources of income.

And in fact, what we see is that this is really the first time that most households became dependent not just on their earnings of two people, but two incomes plus extraction of equity out of their homes.

VELSHI: Right. And that is a big deal.

MANNING: And as a result, this was unprecedented.

VELSHI: That is a big deal, because in my parents' generation, you just really didn't touch that. If you went into your home for more equity, it was because you were either buying something else in terms of another home or doing some massive renovation that was going to increase the value of your home.

The idea that you would tap into your home equity to either spend or pay off credit card bills was unheard of. What fundamentally changed? Did that money become available to us because the banks said so? Did we do that? How did we become this society that tapped into our homes for credit?

MANNING: It's truly striking, because if you look at the growth of consumer debt over the last decade, the greatest growth is mortgage debt, from $3 trillion 10 years ago to over $10 trillion today. And a lot of this starts back in 1986 with the Tax Reform Act.

Many people forget that all of our consumer debts, the interest was tax deductible until 1990. And that is when home equity loans became popular. That's where banks started aggressively marketing to people that they had money tied up in their homes and it was time to free it up and unleash it.

Now we have seen, with deregulation such a tremendous effort to get people to purchase and refinance and take money and put cash in their hands...

VELSHI: And by the way, we used to tell people...

MANNING: ... that they're not getting from their paycheck.

VELSHI: We used to tell people that that is the good debt, mortgages and home equity and student loans is the good kind of debt. Credit cards are the bad kind of debt. And now in 2008 we found out that some mortgages are the bad kind of debt. What is the bigger problem, the debt that is in mortgages or the debt that's on credit cards right now? What is the bigger problem facing America?

MANNING: Well, the big problem is we haven't reached the floor in terms of housing values. And because so many people have psychologically consolidated their bad debt from credit cards into the perception of good debts being their mortgage, they had a false sense of security that they were really handling their household finances.

The reality of it is, is that many people today can't handle their personal finances simply because the interest rates are rising on their mortgage debt.

VELSHI: Tell me what I can tell our viewers. Tell me what they can do right now. If you are saying it is an uncertain situation, tell me what we can do if you think it is only going to get worse.

MANNING: Well, I think what is crucial is that we've got to start taking a stock about how much debt can a household really afford to pay? As corporate America is now going through workouts and writing off their debts, Americans are going to have to take a look, is their $500,000 mortgage on a house that is worth $300,000 feasible?

What kind of workout, what kind of debt relief can they get on their secured debt? They're going to have to take a look at their unsecured debt, talk to their lenders and say, you have lent me more than I can afford. This is exactly how much I can afford to repay or...

(CROSSTALK)

MANNING: ... or I'm going to have to go into a bankruptcy program.

VELSHI: Robert, good advice. And to any of you listening out there who find yourself in that situation, call the bank. Call them and have the conversation with them. Robert Manning is the author of "Credit Card Nation."

Coming up next, why not all debt is bad debt, find out why having some of it can be a good thing. And later on, questions on your debt, we will answer your e-mails. Stick around, YOUR MONEY is coming right back. (COMMERCIAL BREAK)

VELSHI: All right. Mortgage meltdown, credit crunch, whatever you want to call it, debt has become a very, very scary word in this economy to most people, but not all debt is bad debt. Greg McBride, a good friend of our show, is a senior financial analyst at bankrate.com. He joins us now from West Palm Beach, Florida, to explain. Bankrate.com, by the way, can be your friend when you are trying to compare rates.

Greg, you know more about sort of rates than anyone else, because you compare everything that is going on. I just had a conversation where I was saying that we used to say that mortgages and student loans were the good kind of debt, credit card debt is generally the bad kind of debt. Tell me if that is right or wrong?

GREG MCBRIDE, BANKRATE.COM: That is right. However, even good debt can be taken to an extreme. And we have seen plenty of evidence of that just in recent years, buying more home than you can afford, taking on a bigger loan than you can really pay back given your level of earnings.

An example of taking that good debt too far and that good debt can quickly become bad debt if it is unaffordable.

VELSHI: All right. For people who are watching us who are already in that problem -- we get e-mails from people that they are sometimes overwhelmed, how do you make decisions as to how you start to get yourselves out of debt? Do you take everything that you own and sort of make a payoff plan, you pay a little bit more than the minimum on everything? Or do you pay some things off first and leave other things for later? How do you deal with it?

MCBRIDE: Well, the first thing is, make sure that you are current on all of your obligations, that's first and foremost. If that is the place, then what you want to do in terms of a debt repayment plan is rank your debt in descending order by interest rate. And what this does is this effectively segregates the bad debt, things like credit cards, personal loans, auto loans that tend to come at higher interest rates from good debt that tends to come at lower interest rates may carry some tax advantages, things like mortgages and student loans.

And then what you want to do is you want to focus on knocking out the highest interest rate debt first, making smaller minimum payments on the other debts. When you get that top one paid off, you move next down on the list, throw all that extra money into that highest rate debt.

That is the way to really turbo charge your debt repayment plan. And you're doing it in a way that's knocking out the bad debt first and not knocking out the good debt while keeping the bad debt. I see people make that mistake a lot. They will carry a $3,000 balance on their credit card and yet they're throwing an extra $100 a month against the mortgage, that just does not make sense. VELSHI: Right. And there used to be a time when you could say, hey, listen, maybe I've got that money and I can invest it and get that investment back, but generally speaking, if you are playing double-digits in interest rates, there should be no option there. Pay the debt first.

MCBRIDE: Absolutely. I mean, that is a risk-free return. If you are carrying credit card debt at 14 percent, that is a risk-free 14 percent return.

VELSHI: What about negotiating those rates? What room do people have to call their credit card company or the creditor and say, I know, it's 26 percent, I know I've got bad credit, I know I missed some payments, does anybody want to negotiate with you any more?

MCBRIDE: Absolutely. There is plenty of latitude here and, you know, the old saying, nothing ventured, nothing gained. Pick up the phone, try to negotiate a better deal, and it is particularly fruitful if you do have good credit, if you have paid your bills on time.

However, you know, it is something I recommend for everybody. And also, interest rates are falling. So this is the environment where, particularly if you have good credit, you can take your business elsewhere if you are not -- if your issuer is not going the play ball, you can take your business elsewhere and get that lower debt.

VELSHI: Right. If you can show that you will continue to pay your monthly balances, you are actually very valuable to lenders right now, because if they can get their money out of you. Where do you see -- where does somebody find out about how to compare what they are paying to something else? I mean, bottom line is people get those statements and they are shocked by them. What is the best way to figure out you're your options are?

MCBRIDE: Well, it pays to cast a wide net, shop around. First, you know, a lot of people, we open up the mailbox every day, we get all of these solicitations, that depends on credit quality. So you do need a reality check, you need to calibrate, OK, what is my credit ratings versus what offers can I qualify for?

Also, go online, shop around, compare local banks in your area as well as credit unions. Bankrate.com has a free search engine where you can compare rates. Having done that comparison shopping, you now have the ability to go to your issuer and say, hey, look, I know I can get lower rates elsewhere. I'm going to give you the chance to lower my rate and if they don't do that, then they may call your bluff. And if that is the case, then you have to be prepared to go out the door and go someplace elsewhere.

VELSHI: And I have used bankrate.com many times as a source for that sort of information. So it is worth going to it. Greg, good to talk to you again, thank you for being with us. Greg McBride from bankrate.com.

Coming up after the break, a tough lesson to learn in the car loan and student loan market. We will point out the red flags that you need to look out for. You are watching YOUR MONEY on CNN. We are coming right back.

(COMMERCIAL BREAK)

VELSHI: Welcome back to the special "Debt Free Forever" edition of YOUR MONEY. We have talked about good debt versus bad debt. Let's get a specific look at two types of debt that are often unavoidable, as much as we would all love to pay for college or a car with cash, most people don't.

Jennifer Westhoven, welcome to show, let's talk about cars.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Yes. I mean, this is a big purchase, right? You have got to have a lot of money up front. You're going to be in this thing for years so there is always first the buy and lease question, what are you going to do?

Well, one thing I just want to make sure you know is, we are going to stay away from those six- or even seven-year car loans that a lot of you are starting to take that the dealers are dangling in front of you.

We are going to have more on that in a moment, but if you are looking now there is -- right, there is this buy or lease question, so if you are going to drive the car for a long time, 10 years, you're going to be like me, you're going to run it into the ground -- my husband, I should say, that is when you buy the car.

Take the loan, you probably do need a 10 percent down payment. But you know, maybe that is the car that, really, you can afford right now. But if you are like Pete (ph), the floor director here, if you love that new car smell, if you want a new car every few years, that is when you would want to lease, because the minute you drive that car off of the lot, it is worth thousands of dollars less, it is not a good investment if you are going to be selling it soon.

And you know, you don't need a big down payment in that way...

(CROSSTALK)

VELSHI: Yes. Some cars still want that big down payment, but if you're going to keep trading it in, then you don't want to be wasting it and putting that down payment in. But you're never going to own a car in that case.

WESTHOVEN: That's true. But right now car dealers know -- I mean, they are desperate, right? Their March sales were down 12 percent. They have got to sell these things. They know that you're in trouble so they have come up with this idea for people in tight budgets, these six- and seven-year loans as a way to get you into the most expensive car.

Now they -- I think they sound so good, they are clearly bewitching people because one in six new buyer are getting them.

VELSHI: Really?

WESTHOVEN: Yes. That really surprised me, because you know, I think you hear, it is a siren song, right, you get the car of your dreams, you look at the monthly payment, you go, I can afford that.

But this, this is not responsible. All of the consumer experts say you want to stay away from these loans. Anything goes wrong with that car, you know, an accident or you don't -- something, the car could be gone, you are stuck paying for it anyway for years.

And then, even if it drives wonderfully, let's say everything goes great, perfect scenario here, the interest rate on this is huge. So let's say a five-year loan is your typical car loan, you buy a $20,000 car, the interest is about $2,500 extra on top of the price. You put this into a six-year loan, the interest becomes $4,300.

VELSHI: Wow, big difference.

WESTHOVEN: That's $1,800. You know, what could you have done with $1,800? So I think the bottom line is if you think that you are going to need a six-year car loan or a seven-year loan to get that car, you can't afford that car. Like, I am sorry to be the one to tell you, you have got to look in the mirror and go, what can I afford?

VELSHI: All right. Good advice, don't get yourself into a bind you can't deal with. Jennifer Westhoven, thank you so much.

Well, car loans are one issue, the credit crunch is hitting the student loan market as well. While lawmakers introduce legislation to increase federal loans, private lending for student loans is shrinking.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Cindy Printemps (ph), a senior in high school, is learning about federal loans for college. Because she doesn't quality for private loans, she will need to rely exclusively on government loans. Federal loans, which top out at $23,000 for four years, don't cover tuition at many public colleges.

And private college tuitions are simply out of the question for most students who have to rely exclusively on federal loans.

RICHARD VEDDER, CTR. FOR COLLEGE AFFORDABILITY & PRODUCTIVITY: College costs have been going up 7, 8 percent a year. And student loan payments haven't been -- from the federal government haven't been going up quite so fast so kids are having to resort more and more for private lending.

PILGRIM: But private lending is drying up partly because of a tightening credit market, partly because the once secure student customer has become a delinquency risk. Lenders like CIT Group have recently stopped offering student loans. And TERI, a nonprofit that guarantees private student loans, has filed for bankruptcy.

The CEO says students are facing a tighter credit standard.

WILLIS HULINGS, EDUCATION RESOURCES INST.: A lot of the borrowing that is going to be approved are for people who have very high levels of credit. There may be some people who are not going to get approved this year who would have been approved before. Additionally there is going to be some people who don't get enough money or the rates that they do pay are going to be higher.

PILGRIM: Student loans have a default rate of 4 to 5 percent within the first two years after graduation, but that default rate often doubles a few years after that time as students fail to find and keep jobs.

Kitty Pilgrim, CNN.

(END VIDEOTAPE)

VELSHI: All right. For more on the college loan crunch and what other options out there for students and parents are, I am joined now by Seppy Basili. He is the senior vice president of Kaplan. He's the author of several books, his most recent title is "Paying for College: Lowering the Cost of Higher Education."

Seppy, thank you for being with us. We have been hearing, if one isn't sort of following this on a daily basis, the impression that I have is that college loan money is substantially harder to come by than it was last year.

SEPPY BASILI, SVP, KAPLAN: The short answer is that is not going to be the case. And I think it is really important to get that message out. There were a few changes this past fall in the way Congress and the way that the federal government subsidizes loans and that has forced some lenders -- or not forced, but some lenders have now chosen to not participate in those programs, but the federally- guaranteed loans, the Stafford loans, the PLUS loans will still be available, you just may have less lenders to choose from.

VELSHI: Now what does that mean when you say less lenders to choose from? Does that mean the money will be more, will it mean more interest to get those loans?

BASILI: For the federally subsidized ones, they really can't be, where it gets a little tricky are on what are known as private loans. These are loans that are privately funded and where you may see an increased cost with those are around things like an origination fee and the cost of the obtaining that financing.

But for the purpose of the federal program, it is all well established and so there really shouldn't be any major effects (ph).

VELSHI: What about the credit needs that you have to have? Is it like the mortgage industry where your credit has to be better in order to secure these loans? BASILI: Certainly that is the case for private loans. And one of the things that you can do is if you know that you have got students coming to college, now is a great time to get your financial house into order, because it can make a real difference.

VELSHI: All right. So steps to be taken right now, people are getting their admissions, what should you do? Because really we report so much on the increase in the fees for students and tuition and costs of going to college, there must be some people just looking at this thing, I'm never going to make this work.

BASILI: The first thing to do is to work with your college financial aid office. And this is, I think, one of the biggest mistakes people make. If a college is interested in you, they are happy to discuss your financial situation. They can often point you to loans and other kinds of grants that you may not be aware of.

So even if your son or daughter is planning to apply next fall, or planning to start next fall, you should be working with the college financial aid office on your package.

VELSHI: OK. Something people may not know is that it is entirely legal to have someone co-sign the student loans, someone who is not your parents.

BASILI: It is. So that is one of the things, if you are in a real bind, you can have an aunt and an uncle, you can have a family friend, you can have a grandparent. Co-signing is absolutely available and it is a really terrific way to make sure that you can get that student loan.

VELSHI: One of the things we have talked about in the past is that the abundance of scholarships and bursaries and things that are out there that people don't even know about. There is still -- is there still good money to be had there?

BASILI: You know, one of the things that you can do, even right up into the last minute is apply for a plethora of scholarships. There are plenty that are due now this month and next month. And there are a number of Web sites that you can go to, just one key point though, never pay for scholarship information.

(CROSSTALK)

BASILI: That should be disseminated freely. And there are occasionally services that try and charge you, don't do it.

VELSHI: We are hearing from a lot of people who, for various reasons, because they can't access money from their house are dipping into their 401(k)s for credit and for living expenses, even for something as legitimate as a college expense. Your advice is, do not go into retirement to pay -- your retirement money to pay for college.

BASILI: No one will give you a loan to fund your retirement. There are lots of ways to get funding for college, and you should exhaust every other possibility. The same is true for home equity. And that is, again, something that I think a lot of parents who were feeling sort of cash rich in their homes had been planning to use the money out of their homes. It is really not a good idea.

VELSHI: Work hard to get that college loan, if it ends up being loans, that is fine, because your kid has time to pay that off.

BASILI: Absolutely, plenty of time. And, you know, the track record on those loans, kids do pay them off. I mean, it is one of the most successful programs from a lending perspective.

VELSHI: Back when I was in college, it was quite fashionable to take extra time to get through college. At the cost that college comes in at these days, there are many ways to accelerate your way through college, taking extra courses. Sometimes it's a lot cheaper if you can avoid an extra year.

BASILI: It is. And this is something that I really encourage families to talk about. A lot of state colleges will literally let you sort of credit load. They will let you take an extra course or two during a particular semester in order to get out more quickly.

But here is the other real secret, it is AP courses. We have 2 million American students taking the AP tests every year. Those credits can help you to get through college more quickly and it can really help maybe you get you out at least in four years and in some cases as quickly as three or three-and-a-half.

VELSHI: Good advice, Seppy. Thank you so much for being with us. Seppy Basili, senior vice president at Kaplan.

Well, coming up, find out what goes into the magic number that is your credit score and how you can start raising that number right now. You are watching YOUR MONEY on CNN.

(COMMERCIAL BREAK)

WHITFIELD: Hello. I'm Fredricka Whitfield in Atlanta. We want to give you the most recent pictures of what's taking place in New York. The pontiff there as he is in the Popemobile making his way down the very famed and now very crowded and noisy 5th Avenue there in New York. This is following his Mass that he conducted there at St. Patrick's Cathedral right there on 5th Avenue. We can hear the crowd right there and now live pictures of exactly what is taking place there on 5th Avenue. Let's listen in for a moment.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: There you go, you can listen in and you can start to hear the crowds going wild. There he comes. Have you got him?

(CHEERING)

(END VIDEO CLIP)

WHITFIELD: All right. The pope there in New York right down 5th Avenue now getting close to 57th Street at that intersection there. And you can see thousands of people who have lined the streets. In fact, many people have been lined up since about 5:00 a.m. this morning, well before the Mass were (sic) to begin, because they just wanted to catch a glimpse of him going into St. Patrick's Cathedral if they weren't among the lucky ones to actually have a ticket to actually be a part of Mass, and now their second glimpse of the pope.

But of course, CNN will be covering the pontiff's visit in New York now, the second leg of his six-day tour of the United States. Tomorrow, he will be conducting Mass at Yankee Stadium, we will have live coverage at 2:00 Eastern time tomorrow on Sunday.

Much more of CNN and YOUR MONEY, and the "BALLOT BOWL" at the top of the hour.

VELSHI: Welcome back to a special edition of YOUR MONEY, "Debt Free Forever." It affects every aspect of your financial life, but for most Americans, your credit score remains a mystery. How is your credit score determined? What steps can you take right now to improve it? For that we turn to Ed Mierzwinski. He's a consumer program director at the U.S. Public Interest Research Group.

Ed, good to see you again, thank you for being with us. It is a number that goes up to 850 or something like that and we have all got that number. I found some people who are very, very surprised when they go for the first time to check their credit score and in many cases it's lower than people expect. They think they have got excellent credit and the number doesn't indicate that.

Tell me about the credit score.

ED MIERZWINSKI, U.S. PUBLIC INTEREST RESEARCH GROUP: Well, the credit score is sometimes guarded like the Coca-Cola formula by the FICO company. But it is really quite simple. It is largely based on the credit report. Your credit report has how you pay your bills, but if you bills are mixed up, if there are mistakes, if there are identity theft accounts, there are all kinds of reasons your credit score could be wrong. And there are a few other things that you can do to fix it.

VELSHI: First of all, everybody is entitled to their credit report at least once a year and we are going to tell you how you can get that, how you can go to the Web or sign up and get your credit report, and you'll get your credit score at the same time.

But if you don't like what you see, Ed, the first thing you say is that people should read the credit report, their score and the report are two different things, right? And the report has a fairly detailed history of your credit.

MIERZWINSKI: The report is like a resume, the score is just one number. The report is free by law, you might have to pay $5 or $10 to a credit bureau to get your score. There are some places that you can get them for free on the Internet separately from the credit bureaus however. VELSHI: All right. Now one of the things that I think is interesting that you have said is that you should look for mistakes. A lot of people find out there's a mistake or there's account that is shown to be open, a lot of people say, you know what, this thing says I have got a loan for $10,000 for a car, I don't have it, but it looks like it is getting paid the whole time so I'm not going to worry about it.

You should not have anything on your credit report that does not reflect what you have actually done.

MIERZWINSKI: The way that credit report models work, it is more likely you will have some other guy's car loan that he is not paying than that you'll have some car loan that he is paying. But you have got to look at the report, the kinds of mistakes are, first, the credit bureau simply mixes John Smith up with John Q. Smith.

Second, an identity thief took your name, but the accounts that are not yours appear on your report. And then third, there are mistakes with your own reports where they say you were late, you weren't or your mortgage or your student loan was serviced, and it appears as if there were two loans, not one.

VELSHI: So you want to -- and how do you correct these things? Do you have to write to the credit bureau? I mean, one of the things that we have been told is everything has to be in writing. If you do it, you need a record of it.

MIERZWINSKI: You call the credit bureau first, but you need to write to them as well. When you get your free credit report, annualreport.com, you will get a list of what your rights are along with your free credit report. But absolutely, keep everything in writing, don't send any originals to the bureau and be prepared for a long siege.

It can take months to clean up your credit report. And by the way, when you call them up, you will be placed in voicemail jail for a long time. Be prepared to just sit and wait on the phone until they do eventually pick up.

VELSHI: Ed, our viewers can go to annualcreditreport.com, which is where you can get your free credit report. Here is something very interesting, Ed, that we have learned from you, and that is a lot of people want to consolidate the loans and put it onto one card or one loan. But it is important that you are not using the maximum credit that's available to you. Why is that the case?

MIERZWINSKI: The credit bureaus use -- I'm sorry, the credit card companies and the banks, they I don't just look at whether you pay the bill on time, they look at how much of your credit you are using. So it is not that you are maxed that is bad, it's that you are even using half of your credit or more even if you pay on time, hurts your credit score.

So the most important things to do to fix your credit score quickly are: pay your current bills on time, look for mistakes and fix them, and pay down your credit cards to about a third or less of what your limit is.

VELSHI: So if you have limit or combined limits on cards of say $10,000, you want to owe no more than $3,000, but you want to have that $10,000 available to you so that your debt to available money ratio is lower?

MIERZWINSKI: That is exactly right. And if you were to close all of your cards and consolidate them on to one card, you might end up owing the same amount of money, but you only have a much tighter limit. That could be a mistake. You might want to keep the cards open, but pay them down just as you said.

VELSHI: OK. So I want to be clear, you are saying if you have $10,000 of available credit, you are using $3,000, you are saying it is better for credit to keep the $10,000 available credit and be using $3,000 of it than to close out and be using $3,000 of a total of $3,000 that's available to you?

MIERZWINSKI: That is exactly right. If you close out accounts and consolidate onto one card, you may move too close to your limit. The credit scoring computer is not as smart as they think it is, and that will make you look like a bad risk.

VELSHI: Very interesting.

MIERZWINSKI: So have the available credit available to you, just don't use the cards, pay them down.

(CROSSTALK)

VELSHI: Right. That is danger, you have to have the discipline not to do that. Ed, good to talk to you. Ed Mierzwinski...

MIERZWINSKI: Great, great, any time.

VELSHI: ... is the consumer program director of the U.S. Public Interest Research Group. Remember, take your -- go to annualcreditreport.com to get your credit report that you are entitled to free.

Coming up on YOUR MONEY, how to deal with debt and finances when you are in a relationship. I am not saying that you should base your relationship based on it, but come back and we will tell you what to do.

(COMMERCIAL BREAK)

POPPY HARLOW, CNN CORRESPONDENT: I'm Poppy Harlow here at the cnnmoney.com desk with a look at the top business stories of the week. The mega merger of Delta Air Lines with Northwest will create the world's largest carrier. Delta announced the long-rumored deal to acquire NWA for more than $3 billion. The new airline will maintain the name Delta.

One major reason the airlines have been struggling, sky high fuel prices. Both oil and gas rose to new record highs this week. Oil topped $115 a barrel. Meanwhile, AAA reported the national average for unleaded self-serve gas has surged to $3.44 a gallon.

And the housing picture was not looking rosy either, with new home construction hitting a 17-year low. The report of initial housing construction in March showed a far steeper drop than was expected. Housing starts last month were off nearly 12 percent from February and more than 35 percent from March of '07. Bottom line, building new homes takes a back seat as homeowners are struggling with declining values of their already existing properties.

For more on these stories check out cnnmoney.com. Now back to YOUR MONEY.

VELSHI: All right. Debt is probably one of the least romantic words I can think of, but our next guest says every couple should discuss it before getting engaged. Michelle Singletary is the author of Your Money & Your Man: How You & Prince Charming Can Spend Well & Live Rich."

Michelle, you say it is much cheaper to get out of engagement than out of a marriage. You are serious, you want people to talk about their money and their debt and their credit situation, and if it is not working out, split.

MICHELLE SINGLETARY, AUTHOR, "YOUR MONEY & YOUR MAN": That is exactly right. People will spend a year planning their wedding and less than probably an hour or two talking about how they're going to handle your money together. And if that is going to be you, then it is better that you stay single, but you have to be prepared to walk away from the relationship if during, say, premarital counseling you find that you are at odds about money.

VELSHI: Michelle, how does that conversation even come up? I mean, when you are dating someone, it is all love and fantastic. I mean, how do you even have that conversation? I have been telling guys for years they are suckers for what they pay on diamonds, you can't have that conversation.

SINGLETARY: You absolutely have to absolutely have that conversation. Listen, the first date is too soon, the honeymoon is too late. So have it as you are approaching those talks about you. I think you are the right one, you are the one, and when you start to have those conversations then the next conversation is, hey, baby, can I see your credit reports? Can I see your credit scores?

VELSHI: And you say that if people are elusive about this, that is a red flag. Now I have got to say I think most people are elusive about this, so you should probably cut your significant other a little slack. Is there some way get that conversation going with, can I see your credit report?

SINGLETARY: Well, you know, I think at that point, you need to be walking your way towards marriage or engaged before you actually share that actual credit report, but if someone balks, if you have asked them to marry you or you are engaged to a fellow and he does not want to show you that and not put everything on the table, you need to walk away from the relationship, because if you can't talk about this before you get married, it is going to be very difficult to talk about it after you get married.

VELSHI: One of the biggest problems that married couples have, one of the source of arguments. All right. Let's talked about credit cards, bank accounts, a lot of people say, you know what, we have different kinds of ways of handling money. Our credit scores are different, our ratings are different, let's just keep it all separate.

I have got my credit card, you have got yours. I have got my bank account, you have got yours. You don't like that idea?

SINGLETARY: I don't. You might as well stay single. Listen, if you want to keep everything separate, then you should stay single, because what you are looking for is a roommate, not a lifetime mate. And I am very serious about that. I know I am very different than a lot of financial experts who say, oh, you should have separate bank accounts. That is crazy.

That is what single people do. That's' what roommates do. If you are going to get married, you should join everything, your income, your debts, your bank accounts, everything, because that forces you to sit at the table and talk about your financial life. And if you can't do that, then you shouldn't be married and this whole idea that whoever makes more should pay more of the bills, that is crazy.

So when you go grocery shopping, my husband likes more ice cream more than me, should I not pay for the ice cream because he likes it more than me? I mean, that is what we have couples doing in relationships. And it is silly and destructive to the relationship.

VELSHI: All right. Let's say your credit score is 700, mine is 500, are we marrying our credit scores? Are they going to be 600? Or are you getting mine or am I getting yours?

SINGLETARY: Well, first of all, I'm not marrying you if your credit score is there. I have a standard. No.

(LAUGHTER)

SINGLETARY: Listen. When you get married, your credit scores are not married. You keep your individual scores after marriage. It only -- what your spouse has in terms of debt or how they pay the bills only impacts if you have shared debt, if you co-sign on a car loan or home. but you keep the credit scores. And so if yours is over 700 and your honey's is in the 500s, you want to spend some time helping your spouse to bring up that score so that when you do go get a house, you will get the best rate.

VELSHI: Michelle Singletary, that is the sound of relationships breaking up across the country. Michelle Singletary is the author of "Your Money & Your Man: How You & Prince Charming Can Spend Well & Live Rich." Thank you for being with us. Come back lots.

Coming up next on YOUR MONEY, your questions answered on all things debt. Michelle is going to stick around and give us some advice, so you stay with us.

(COMMERCIAL BREAK)

VELSHI: We are talking all about credit and debt today. We asked you to send in questions that you have on the topic and boy, did we get a lot of e-mail. Rejoining us in Washington, Michelle Singletary, author and syndicated columnist for The Washington Post.

Michelle, ready to take some questions?

SINGLETARY: I sure am.

VELSHI: All right. First one up is from Yvonne who asks: "Can you help me understand why are there three credit reporting agencies and why you have to check your credit with all three of them?" Great question. So what's the answer to that, Michelle?

SINGLETARY: It is a good question. Listen, there are three, because there is competition. And that's what they do. But you need to check all three of your bureaus, because you have three different reports. Not all of your creditors report to all three bureaus, so you need to check each one to make sure that the information is correct, because that impacts your credit score, which of course impacts what kind of interest rates that you get.

So -- and also, because they only contact one bureau at a time, you want to be sure that the information from a particular creditor is correct. Because say, for example, you want to go get a car loan, they may only pull your Equifax credit report so you want to be sure to check that one. Another creditor may call Experian.

VELSHI: Experian, TransUnion, Equifax, those are the three credit unions, check them all. Ceasar (sic) has sent us an e-mail. He says: "I have recently run my credit and discovered student loans that are not mine and are five months behind. How do I handle that?"

SINGLETARY: Well, you want to handle it very quickly. What you want to do is you want to file a report with the credit bureaus and say, this information is inaccurate, but what you want to do is contact the student loan company that is reporting that this is your debt, because when you contact the credit bureaus first to say, this is wrong, they are going to just go back to the source.

So you want to start at the source to see what has happened, perhaps they have mixed you up with someone with a similar name or similar Social Security number.

VELSHI: All right. And Ed Mierzwinski earlier on our show said once you have written that letter to start to correct something, dig in, it could take a while. Alex has sent us an e-mail to say: "I'm in a bit of debt. I'm managing to pay off all of my monthly payments, I'm not (ph) thinking about trying a credit service that can bundle most of my payments into one monthly payment, is that a good idea? What should I look out for?"

SINGLETARY: Well, lots of people have got all kinds of debt and they're trying to find somebody to help them. It is a good idea if you are overwhelmed, but you want to be very careful that you don't pay a lot of fees to have someone handle this for you. They are going to charge you a set-up fee from anywhere from, say, $50 to $75. And then they are going to charge you a monthly fee which should not be more than, say, $40 a month at that.

But if you run into an outfit that wants to charge you $1,500 or $2,000, you can use that money to pay your bills. I would suggest that you go the debtadvice.org and you can type in your zip code and you will find a legitimate credit counseling agency near you.

But be very careful and you also want to be careful that they don't pay your bills late. Because lots of people get into some of these organizations and they pay the bills late and then your credit score goes down.

VELSHI: All right. Michelle, that's good advice. Please, if you're out there and you're having a problem and you're going to get help, make sure it is legitimate. Check out the organization you're using with, check it out with your state, with your city, just make sure it is really a legitimate organization and it is not somebody who is just consolidating your loan and charging you for it.

Michelle, thank you very much for taking these e-mails for us, it is always a pleasure to talk to you. Michelle Singletary joining was your e-mails.

Well, coming up on YOUR MONEY, a story of economic peril in America, a place you probably didn't expect.

But first, this week's "Right on Your Money."

(BEGIN VIDEOTAPE)

ROMANS: (voice-over): Entrepreneur Robert Kiyosaki took what he learned a as kid and then taught others with his number one New York Times best seller "Rich Dad Poor Dad."

ROBERT KIYOSAKI, AUTHOR, "RICH DAD POOR DAD": My rich dad taught me to be a rich man playing Monopoly. So as a little child I got the formula, I understood financial responsibility, discipline, cash flow. I learned so much just by having fun.

ROMANS: But teaching kids about money is not always child's play. Kiyosaki says it is important to give them some real world lessons.

KIYOSAKI: A thing a parent might do is ask them to write down everything they spend their money on so they can see where it goes and it is a great way to teach them what money is for, what they are doing, to learn their spending habits.

ROMANS: Kiyosaki says children's financial education is the key.

KIYOSAKI: I suggest, you know, be forthright, be frank, you know, you should teach kids the vocabulary of money. You know, do you know the difference between an asset and a liability? Cash flow versus capital gains? It is not that hard to understand and that is what my rich dad taught me.

(END VIDEOTAPE)

VELSHI: Well, you know debt is becoming a huge problem when documentary films are made about it. Due out this summer, "I.O.U.S.A." looks at our rapidly growing national debt and its consequences for the United States and its citizens.

Brooke Anderson has a closer look.

(BEGIN VIDEOTAPE)

PATRICK CREADON, DIRECTOR, "I.O.U.S.A.": We have a temp graphic that is coming in.

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT (voice-over): Documentary maker Patrick Creadon is putting the final touches on his new film. The subject, nothing less than America's perilous economic future.

CREADON: The government has made more promises than it can possibly pay for.

ANDERSON: The title of his film sums up the country's debt- ridden condition, "I.O.U.S.A." Take the federal debt, the government owes more than $9 trillion, or the Medicare and Social Security programs, they face long-term deficits projected at more than $40 trillion. The bill is being left for future generations to pay.

CREADON: It is just not fair. When you spend other people's money, which is what we are doing today, it is mean.

DAVID WALKER, FMR. COMPTROLLER GENERAL: Our financial condition is worse than advertised.

ANDERSON: David Walker, who recently resigned as head of the Government Accountability Office, is among the stars of the documentary. He insists if political leaders don't address structural reform, the picture won't be pretty.

WALKER: Well, you could find the situation where the government is going to have to cutback on doing a lot of things that the people have now taken for granted or where income tax rates may have to more than double.

ANDERSON (on camera): Failing that, the nation could see much higher inflation or interest rates, Walker argues, the impact could far exceed the current economic downturn.

WALKER: If we get a crisis, it will be much more dramatic than the one that we are facing today. And it will affect tens of millions of Americans.

CREADON: A lot of times when I'm working on the film, I have one of my daughters sitting on my lap. We have three daughters.

ANDERSON: Creadon says he made "I.O.U.S.A.," which comes out in August, largely out of concern for his kids' generations.

CREADON: If the debt stopped growing right now, we would probably be OK. We could probably handle it. It is not today's problem, it is what lies ahead. We have a...

ANDERSON (on camera): These guys.

CREADON: For these guys, my assistant editors.

(END VIDEOTAPE)

VELSHI: That is CNN's Brooke Anderson.

And that is it for this week's show. Please send us your questions and your comments on the topic of credit or debt or anything else that has to do with YOUR MONEY and we will do our best to answer you or do something about it on the show. You can drop us a line at yourmoney@cnn.com and we will do our best to answer those on air. Thank you for joining us for this edition of YOUR MONEY. We';; see you back here next week, Saturday at 1:00 and Sunday at 3:00. See you then.

This story ran on CNN on April 19, 2008.