Ten Tips for Boosting Your Credit Score in 2009

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The worsening economic crisis has put more pressure on consumers and their credit than ever before. Credit scores should be a top priority for consumers because it is the most important factor in determining creditworthiness. Credit expert Kenneth Lin offers ten new tips for improving your score in 2009.

Our goal is to help Americans understand the value in building a better score and then to provide them with the information and score simulators that do it most effectively

As 2008 draws to a close, consumers remain concerned about how larger economic issues are affecting them. Many are turning to their credit score as a barometer of their financial health because they understand that a higher score can save them thousands of dollars in credit card and loan interest.

Free credit score resource Credit Karma has seen daily visitors to its site double to more than 170,000 consumers over the past few months. These consumers are overwhelmingly seeking free scores so they can begin improving them to save even more money.

"Our goal is to help Americans understand the value in building a better score and then to provide them with the information and score simulators that do it most effectively," explained Ken Lin, founder and CEO of Credit Karma. "Even those who are not currently considering a large purchase should work to raise their score because it can save them thousands of dollars on credit cards or home equity loans."

Mr. Lin offered ten tips for consumers interested in raising their credit score for 2009.

1.    Review your credit report for accuracy: This is the easiest and most basic step in trying to improve your score. Request a free credit report from http://www.annualcreditreport.com, and then review it to make sure your bank accounts, any late payments, and all other information is listed correctly. If not, report it immediately to the proper bureau. They are required to respond within a month.

2.    Pay your bills on time: Just one late payment can reduce your credit score and affect the interest rates you pay on current and future accounts. Keep accurate records and pay your bills on time. These are reported in 30-day cycles so you should check your score at least once a month.

3.    Keep credit card balances low or pay down high credit card debt: The amount of credit card debt you carry in relation to your total credit limit is called your utilization rate. The lower your rate, the better for your credit score.

4.    Avoid derogatory records: Late payments, collections, and charge-offs will lower your overall credit score and can remain on your credit file for up to 10 years. If you are concerned, consider alternatives such as a debt consolidation loan before you miss that first payment. Once the negative marks are part of your file, only time can remove them.

5.    Utilize the 100-word credit bureau statement: This is a little known way to help improve your credit image. Under the Fair Credit Reporting Act, consumers can add 100 words to their credit bureau file. A well crafted statement about your unique circumstances or credit worthiness could positively influence a lender. But keep in mind that lenders could still bypass this statement and only consider your score.

6.    Avoid excessive shopping for credit cards: A number of inquiries for additional credit often reflect poorly on a credit report. Those inquiries that result in a hard credit pull will also lower your actual credit score. Be sure to research credit cards or loans first and apply only to those that are necessary and for which you are qualified.

7.    Avoid retailer credit cards: Retail credit cards can be useful for high credit score customers in search of discounts, but for most customers they are a bad idea. These cards limit purchasing to a specific retail outlet, and the fees or higher interest rates charged for missed payments are often higher than normal credit cards. This can effectively wipe out any discounts offered through the card.

8.    Don't put your credit in a drawer: Many consumers concerned about their credit make the mistake of freezing spending. This can have a negative impact on your credit score because bureaus look for consumers that use credit responsibly. By ignoring your credit, you are not giving lenders current data to consider as a counterbalance to past negative factors. Be sure to use cards at least once every six months and pay off balances.

9.    Maintain old lines of credit and accounts: Bureaus consider a long-standing credit line to be a positive factor in your credit score. Even if you no longer use a credit card or line of credit, keep it open. Closing it could have a negative effect on your score. You should also consider using it once every six months to show activity.

10.    Protect yourself from identity thieves: Monitor your score monthly for fluctuations that might indicate identity theft. Also be sure to look at every piece of mail you receive and shred those with sensitive information or credit card offers. Identity thieves can ruin your credit score in a matter of minutes.

"Consumers considering large credit purchases or those concerned about high monthly payments should make their credit score a top priority," continued Mr. Lin. "A good credit score is as important as a trusted financial advisor to building and maintaining financial security."

About Credit Karma
Based in San Francisco, Credit Karma is a pro-consumer credit score company dedicated to helping consumers better understand the power of their credit by giving them completely free access to their credit score as often as they wish, providing a host of tools and services to help them track and monetize that score, and helping them become better overall credit consumers. At http://www.creditkarma.com, consumers not only learn their score, but they can identify what behaviors will positively impact their score and then gain preferred product pricing based on their credit score range.

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Michael Azzano
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