Now that you know what CRAs (Credit Reporting Agencies) use to calculate you credit score, there are many ways to beat the credit game and ensure you are building solid history and a higher credit score. Additionally, if you are starting over, you can make sure the decisions you make will serve the purpose of redeveloping your credit (see the article on “Starting Over”). After learning more about credit reporting and scoring, you feel that you may be in a credit crisis, there are ways to get debt relief, and redevelop credit once your are able to start over.

Regardless of your credit situation, there are six basic rules to follow when developing good credit. Of these, the two most important are on-time payment history and balance management.

1. On-time payment history: Because this payment history is the most significant component judged in determining your credit score, it is vital that you pay all accounts on or before their due date. Although paying early has no effect on your credit score, you have to make sure that you completely avoid any late payments, which will lower your score if reported. However, most creditors report late payments that are made 30 days or more after the due date to CRAs; this provides some leeway, but should certainly not be counted on as a regular strategy for paying bills.

By making all payments on time, regardless of type of credit account, form of credit, grace periods or creditor reporting standards, you avoid the possibility of referrals to a third party collector or attorney’s office which ultimately might result in the creditor obtaining a judgment against you. Depending on the laws of your state a judgment might enable a creditor to obtain a lien, wage garnishment, or bank levy in an attempt to collect on the debt. A judgment is a matter of public record becoming part of your credit report, which is always detrimental to your credit score.

Of course, if you are already have collections accounts, judgments or liens against you, it is best to get them resolved, so that you can later redevelop your credit. In order to resolve the accounts your first step should be to check the statute of limitations in your state. A creditor is limited by a certain number of years in their attempts to collect on a debt. If you have not received a statement, demand letter, or collection letter in several years it is a good idea to check with your local county court or a legal aid office to determine what the statute of limitations is in your state. If you are beyond this term you can then file to have the negative accounts removed from your credit report.

2. Balance management: There are a few strategies that need to be incorporated to tackle the portion of your credit score that is determined by the balances you hold on your accounts. First, always pay off balances in full. When a creditor updates your account history in your credit file, having a current balance of zero is ideal. Additionally, keep a low debt-to-value on all revolving credit accounts, and installment accounts when possible. A debt-to-value ratio that is considered financially healthy is less than 50% of credit used from available credit. For instance, if you obtain a $1000 credit limit on a credit card, no more than $500 of it should be used at any time. This will be reported to your credit file as the “high balance” on your revolving account; when you use less than 50% of your available credit, it demonstrates that you are managing it wisely.

It may not be possible to keep a low ratio on installment accounts like student loans or mortgages. At the very least you should be maintaining solid payment history on high balance accounts such as these.