Nothing shows you can handle being in debt more than regularly making payments on your credit cards and keeping their balances down.

Don't end up in court for paying late

It's fairly easy to negate the damage of a late payment by simply being on time with all subsequent ones. If, however, you end up in court your record will be irreparable for many years.

Don't take on too much debt

Try to have only one, but no more than two credit cards and no more than two major debts (e.g. a home- or car loan).

Never max out your credit cards and try to keep the outstanding balance below half of your credit limit. The lower your balance in relation to your credit limit, the better it is for your credit score.

Avoid taking on more credit while you are paying off other debts.

Aim to cut what you spend on debt each month to less than 30 percent of your after-tax income.

The devil is in the debt ratio

Your debt ratio — the difference between what you owe and your credit limit — can make up 30 percent of your credit score. Creditors like that gap to be gaping and it will be detrimental to your rating if you, for example, owe R14 500 with a limit of R15 000.

If you're planning to apply for a big loan, first pay off all balances that are close to their limit. Don't submit your application until all outstanding balances are less than 50 percent of their respective limits.

Never ask your creditors to lower your limits as this will instantly reduce that all important gap between your balances and the credit available to you.

When paying off debt it's cheaper to tackle those with the highest interest rates first. However, when you're trying to improve your credit record it's best to first pay debts that are the closest to their maximum limits.

Article continues on pages three to four: nine more steps to a perfect credit score...