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Take Control of Your Credit Score in 2009

The 2008 upset in the economic marketplace will probably be an event for the history books. Tumbling credit scores and tightening reins on available consumer credit may have some consumers feeling as if their financial reputation is history as well. However, now is not the time to despair. Take the first step, and while it won't happen overnight, there are plenty of ways to take control of your credit score in 2009.

Knowing exactly what is being stated on your credit report is the first step to taking control. The place to begin is by contacting the three major top credit bureaus - Equifax, TransUnion and Experian. What may surprise some is that each report will likely differ slightly from one another. Creditors are not required to report to each bureau, so they will generally report only to the bureau to which they subscribe. Therefore, it will be necessary to request a report from each bureau.

Thankfully, federal law entitles consumers access to one free report from each agency per year. The authorized source for the request is made through the Annual Credit Report Request Service. Consumers have the choice of asking for one report at a time throughout the year or all three at once.

Expect a mistake or two on each report as these bureaus only report the information, they do not verify the information. The responsibility to clearing up those mistakes falls to each individual. While examining the reports, look for typing errors, incomplete information and inaccurate account histories.

From there, create a list of disputed items. Once the mistakes are identified, either fill out the form provided by the bureau or write a letter explaining why the mistakes are incorrect. Another good idea is photocopy the report and highlight the errors and send it to the bureau. Include supporting documents which verify your assertions. Always keep documentation of everything you send. By law, agencies must investigate disputes within 30 days of receiving the letter. Items that cannot be verified by a creditor are removed. A free updated copy of a report will be sent to the consumer if any changes are made.

Disputes aside, the other way to take control of a credit score is to dissolve debt. A successful spending plan must include methods for making timely payments each month. Now more than ever it's vital to be proactive and contact creditors if there will be difficulties in making a payment on time.

While experts recommend carrying two to four credit cards, it may be necessary to close out other unused credit accounts. Do this slowly - over the course of several months -- as closed accounts can negatively impact a credit score. To keep the FICO score healthy, maintain revolving debt at approximately 50 percent of available credit. Consider closing newer accounts so as not to lose the longer credit history. It will be necessary to verify these accounts are being reported as "closed by consumer" for the best results.

Rebuilding a good credit score takes time but not doing so can cost a lot of money in the long run. The sooner an individual takes steps to do so, however, the sooner improvements can be made to the score. Adding stability to a file can be accomplished by having positive information applied. Inquire if a creditor is reporting on time payments and creditworthiness. Some may or may not.

Also most importantly, take the time to open a savings account to demonstrate that a reserve is being established as a buffer and to repay debts. One possibility is to open an online savings account. Generally, these accounts offer a higher rate of return by eliminating additional expenses which allow the banks to pass the savings to the bank clients. Especially convenient, direct deposit can be established to such an account, making it easier than ever to save.

Many people have had their share of ups and downs in 2008. It may be tempting to accept defeat in the coming days. Or, the New Year can serve as the ideal opportunity to initiate some positive steps and take control of your credit score in 2009. Every positive step made is money back in your pocket. Bank on it.

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