Editor's note: "The First 90 Days" is a series about how to make 2016 a year of breakout growth for your business. Let us know how you're making the first 90 days count by joining the conversation on social media with the hashtag #Inc90Days.
A good credit score is a little like a professional network: You care about it only when you really need it.
A good credit score can mean qualifying for lower interest rates and better terms; a bad one can mean you don't qualify for any kind of financing at all.
Unfortunately, if you need to borrow money -- or get insurance, or lease a facility, or build inventory, or a variety of other reasons -- and you don't have a good credit score, it's impossible to correct the situation overnight.
That's why the time to start repairing your credit is now, not when you really need it.
Fortunately improving your credit score is easy.
1. Check out your credit reports.
Another way to see your credit reports is to use a service like Credit Karma. (I'm not specifically endorsing Credit Karma: I like it and think it's handy, but I'm sure other free services are useful too. Unlike some services, Credit Karma is free and you don't have to provide credit card information.)
Once you've signed up, you can see your TransUnion and Equifax credit scores and view the information contained on those reports. Generally speaking the entries on the different reports will be the same, but not always; for a variety of reasons credit reports are rarely identical.
2. Dispute derogatory marks.
In the old days, you had to write letters to the credit bureaus if you wanted to dispute errors. Services like Credit Karma let you do it online.
Just make sure you get the most bang for your dispute bucks. Certain factors weigh more heavily on your credit score than others, so pay attention to them first.
We'll start with derogatory marks like collection accounts and judgments. It's not uncommon to have at least one collection account appear on your report. I had two from health care providers I used after having a heart attack; my insurance company was extremely slow to pay and kept claiming it had paid while the providers said it had not, and eventually the accounts ended up with a collection agency. At that point, I decided to pay them right away and argue with the insurance company later, but both collections wound up on my credit report.
Fixing those problems was easy. I clicked the "dispute" button that appeared by the account, selected "The creditor agreed to remove my liability on this account," and within a week the dispute was resolved and the entry was removed from my credit report.
Keep in mind some disputes will take longer than others. But that's Ok -- once you initiate a dispute, you're done. The credit bureaus are required to investigate the dispute and report the resolution.
Spend as much time as it takes trying to have derogatory marks removed because they also weigh heavily on your overall score. Then...
3. Dispute late payments.
Mistakes happen. Your mortgage lender may report that a payment was late that was in fact paid on time. A credit card provider may fail to enter a payment correctly.
You can dispute late payments -- whether in accounts that are current or accounts that have been closed -- the same way you dispute derogatory marks.
Your payment history is another factor that weighs heavily on your credit score, so work hard to clean up errors.
4. Decide how far you're willing to go.
So far we've discussed trying to remove inaccurate information only. You can, if you choose, also dispute accurate information.
For example, say an account went to collection, you never paid it, and the collection agency gave up. All that remains is the entry on your credit report. You can still choose to dispute the entry. Many people do. And sometimes those entries will get removed.
Why? When you enter a dispute the credit bureau asks the creditor to verify the information. Some will. Many, like collection agencies, will not. They'll simply ignore the request -- and if they do ignore the request, the agency is required to remove the entry from your credit report.
What that means is that smaller firms, like collection agencies or local lenders or small to midsize service providers, are less likely to respond to the credit bureaus. It's a hassle they don't need. Banks, credit card companies, auto finance companies, and mortgage lenders are a lot more likely to respond.
So if you want -- and I'm not recommending this; I'm just saying it's a strategy you might decide to use -- you can dispute information that you think is accurate in hopes that the creditor will not respond. (This is the strategy many credit repair firms use to try to improve their clients' scores.) If the creditor doesn't respond, the entry will get removed.
Should you take this approach? That's up to you. (You could argue I shouldn't even mention it, but it is something people do, so I felt it was worth discussing.)
5. Do a little haggling.
Maybe you tried and failed to remove a negative comment, or a late payment, or an account that was marked "paid as agreed" (which might mean the creditor agreed to let you pay less than you owed). Should you give up? Nope. Try asking nicely.
Creditors can tell credit bureaus to remove entries from your credit report at any time. For example, I hadn't charged anything on a particular credit card for months and didn't notice that I had been charged my annual fee until the payment was late. (Like a doofus, I was just tossing the bills unopened because I "knew" there were no charges.)
The late payment showed up on my credit report so I called the credit card company, explained what had happened, said I had been a customer for years, and asked if they would remove the entry. They said sure. And they also agreed to waive all annual fees in the future. (Proving yet again that you can't get if you don't ask.)
When all else fails, call and ask nicely. You'll be surprised by how often a polite request for help pays off.
6. Increase your credit limits.
Another factor that weighs heavily on your credit score is credit card utilization. Your ratio of available credit to credit used makes a big difference. Generally speaking carrying a balance of more than 50 percent of your available credit will negatively impact your score; maxing out your cards will definitely hurt your score.
One way to improve your ratio is to pay down your balances, but another way is to increase your credit limit. If you owe $2,500 on a card with a $5,000 limit and you get the limit increased to $7,500, your ratio instantly improves.
How do you get your limits increased? Once again, call and ask nicely. If you have a decent payment history most credit card companies will be more than happy to increase your limit -- after all, they want you to carry a high balance. That's how they make money.
7. Get a new credit card.
Another way to increase your credit card utilization ratio is to get a new card. As long as you don't carry a balance on that card, your available credit immediately increases by that card's limit.
Try to get a card that doesn't charge an annual fee, though. Your best bet is through a bank where you already have an account. Granted cards with no annual fee tend to charge higher interest rates, but if you never carry a balance the interest rate is irrelevant.
But be smart about it; the goal isn't to get access to more cash, the goal is to improve your credit score. If you think you'll be tempted to run up a balance on a new card, don't get it.
8. Pay down your balances.
I know. You need a higher credit score because you want to borrow money; if you had the money to pay down your balances, then you might not need to borrow. Still: decreasing your percentage of available credit used can make a quick and significant impact on your credit score. So go on a bare-bones budget to free up cash to pay down your balance. Or sell something.
Paying down balances may be tough to pull off as a short-term move to increase your credit score, but it should be part of your long-term financial plan. Not only will your credit score increase over time, you won't pay as much interest -- which, if you think about it, is just giving the credit cards money you prefer to stay in your pocket.
9. Get added to another person's card.
Say your spouse has a credit card with little or no balance and a great payment history; if he or she agrees to add you as an authorized user on that account, from a credit score point of view you automatically benefit from her card's available credit as well as her payment history.
Keep in mind if he or she makes a late payment, that entry will appear as negative on your credit report too.
So choose your credit card friends wisely.
10. Hang on to your "old" credit cards.
Your age of credit history has a moderate but meaningful impact on your score. Say you've had a certain credit card for 10 years; closing that account will decrease your overall average credit history and can negatively impact your score, especially in the short term.
If you're hoping to increase your credit score but you also need to get rid of a credit card account, get rid of your "newest" card.
And finally, the one credit score gift guaranteed to keep on giving:
11. Pay all your bills on time.
Even one late payment can hurt your score. Do everything you can, from now on, to always pay your bills on time.
And if one month you aren't able to pay everything on time, be smart about which bills you pay late. Your mortgage lender or credit card provider will definitely report a late payment to the credit bureaus, but utilities and cell providers likely will not.
Check the "Accounts" section on your credit reports to see which accounts are listed, and if you have to pay late, choose an account that does not appear on your report.
And then work really hard to make sure you can always pay everything on time in the future. Your credit score will thank you, and so will your stress levels.