Which of the following will increase your credit score?(1 point) Responses Your credit record goes back years, but all your current loans and/or accounts were opened recently. Your credit record goes back years, but all your current loans and/or accounts were opened recently. You have many missed or late payments on your credit cards or loans. You have many missed or late payments on your credit cards or loans. You have a major credit card, a store credit card, and a gasoline credit card, as well as a student loan and an auto loan. You have a major credit card, a store credit card, and a gasoline credit card, as well as a student loan and an auto loan. You recently applied for several credit cards.
Having a longer credit history will increase your credit score.
To increase your credit score, you should focus on the following steps:
1. Pay your bills on time: Having many missed or late payments on your credit cards or loans can negatively impact your credit score. So, make sure to pay all your bills on time to improve your creditworthiness.
2. Maintain a good credit history: Your credit record goes back years, and having a longer credit history can positively impact your credit score. While all your current loans and accounts being opened recently might not directly boost your score, maintaining a positive payment history over time will help improve your creditworthiness.
3. Diversify your credit: Having a mix of different types of credit, such as a major credit card, store credit card, gasoline credit card, student loan, and auto loan, can positively impact your credit score. This demonstrates your ability to manage various credit accounts responsibly.
4. Limit new credit applications: Applying for several credit cards or loans within a short period can temporarily lower your credit score. Each time you apply for credit, it triggers a hard inquiry that can impact your creditworthiness. To avoid this, only apply for credit when necessary and do not open multiple accounts simultaneously.
By following these steps, you can work towards increasing your credit score over time. Remember, improving your credit score is a gradual process, and it takes time to see significant improvements.
To determine which option will increase your credit score, we need to understand the factors that affect it. Here are the factors typically considered:
1. Payment history: Making timely payments on your credit cards and loans has a significant impact on your credit score. So, having many missed or late payments (as mentioned in the second option) will likely lower your credit score.
2. Credit utilization: This refers to the amount of credit you're using compared to the total credit available to you. Maintaining a low credit utilization ratio is considered positive for your credit score. Having multiple credit cards and loans, as described in the third option, can potentially improve your credit utilization ratio and result in a higher credit score.
3. Length of credit history: The length of your credit history is important as it reflects your experience in managing credit over time. If all your current loans and accounts were recently opened, as mentioned in the first option, it implies a relatively shorter credit history, which could have a negative impact on your credit score.
4. Credit mix: Having a diverse mix of credit accounts, such as credit cards and loans, shows that you can handle various types of debt responsibly. So, having a major credit card, a store credit card, a gasoline credit card, a student loan, and an auto loan (as outlined in the fourth option) can potentially improve your credit score.
5. New credit applications: Applying for new credit cards frequently, as mentioned in the last option, can result in multiple hard inquiries on your credit report. These inquiries can negatively impact your credit score.
Based on these factors, the option that is most likely to increase your credit score is having a major credit card, a store credit card, a gasoline credit card, a student loan, and an auto loan (option 3). This option demonstrates a diverse mix of credit accounts and suggests that you can handle different types of debt responsibly, which is often seen as positive by lenders and credit bureaus.