I think we can all agree that the credit crunch in the U.S. really exists. Industry experts, like myself, can see that the problems consumers are facing are just beginning, not ending. Now is the time to pay careful attention to your credit reports and credit scores so potential unilateral creditor actions don't sink your financial ship.

A couple of disturbing events recently have created great concern for me, and consumers on both sides of the pond should be vigilant to watch for these three time bombs that can be dropped on you at any time.

Bomb 1. Credit Limits Slashed With Samurai Skill Some banks are slashing credit card credit limits without notice. Say you have a $15,000 credit limit on a particular card. Banks are slashing limits without warning to as little as $100 of the current balance. Consumers in the U.K. that just woke up to find their limits slashed were caught off guard when they went to use their cards, only to have transactions declined when they exceeded the limit.

Lenders state they are slashing limits of cardholders that create a increased risk for them but sufficient examples of people that have good credit and who have not been delinquent, but had their credit limits reduced exist to give rise to concern that this practice might also be created to trip people into unexpected overlimit or other fees.

Consumers are reporting they had little or no notice this was going to happen. And while the policy can make sense if a delinquent card user is exposed with too much available credit, you can easily see how an excellent paying small business customer could be negatively impacted if their limit was slashed and they were essentially unable to use the card for regular transactions. If you need a card for traveling and your limit is slashed while you are on the road, you could be stuck in Peoria, and that's not fun.

Bomb 2. You Are Punished For Financial Prudence - If you've done everything right according to financial education and financial literacy classes you can find that your credit card may be cancelled anyway. Much emphasis is given to providing better education to consumers to use their credit cards wisely, pay the balances off in full each month and not to carry a balance. However, some lenders have been sending out letters and closing the accounts of people that either are not using their cards or paying off the balances in full each month. The same old "managing risk" excuse is being used by lenders on this as well but enough people have come forward with excellent credit scores and stellar payment records to blow holes in that defense.

People that pay their balances off in full each month do not make money for the banks. The banks goal is to make money off each customer. So if you follow the advice that so many are trying to teach you could actually wind up with your card being closed on you. Ironic.

Bomb 3. Your Credit Score Gets Nuked - As a result of the above two creditor actions, consumers are taking a hit on the chin with reduced credit scores. A reduced credit score can lead to the higher cost of credit, higher insurance premiums or employers looking at your credit report and thinking you are a risk, when you're not.

You see when your credit balance is close to the credit limit it shows the credit scoring models that your account is maxed out. It is always best to keep your balance at 30% or less of your credit limit but when you have operated your account knowing that you had a $10,000 limit with a $3,000 balance only to wake up with a $3,100 limit. You go from a balance of 30% of your credit limit to 97%.

If a lender closes your account this can terminate your good credit history with that lender and hurt your credit score. A major factor in growing a good credit score is the length of the history with a lender. If that account is closed then the value of that credit history is diminished.

The reduction of your credit score without your permission might not seem like a big deal but look at how moving down just one of two scoring brackets can cost you money out of your pocket when you apply for credit. And your score reduction does not have to be drastic. As little as a ten point decline in your score can drop you into the next lower credit band and there is no doubt about it, that will cost you.

Let's say one of these creditor actions results in you moving from the top of the credit score hill to the next lower band. Over 30 years that will cost you $12,960 in additional interest and if the impact becomes so great that you'd bump down two bands then the arbitrary creditor initiated action will cost you $29.520 of your hard earned money.

Credit Score Range and Cost of Credit

Take Action Right Now to Protect Yourself

The most prudent thing you can do right now is to check to see what your credit score is. If your score is within 20 points of the bottom of the band you should take action now to increase your credit score as a DMZ against creditor impact.

If you live in the U.S. then get your credit report and credit score online here. The credit scoring tools available online, when you order your credit score here, can show you instantly what you would need to do from your current score to improve your score.

Don't operate in the dark, get your credit score now and review your credit report as soon as possible to eliminate any current score and report problems. And don't let your credit score laze about near the bottom of the credit score band you are in. The potential is growing day-by-day that you'll be a victim of these three credit report bombs and it would be prudent to have your credit score house in order to minimize the impact on you and your bank account.