Question

In this section, you’ll consider building credit and some protections available under the law.

Your car needs a new transmission. Since it’s old, you don’t want to spend more money on it and decide to search for a replacement car. You want to purchase a used car, but you don’t have enough savings and will need a loan. You decide to start investigating your credit to check if you would qualify.

Your friend Becky shows you how to check your credit score in your credit card app. You find out that it’s only 580, which is considered “fair.” Becky tells you that this score probably isn’t high enough to get a loan. She tells you about some ways to improve your score.

Which of these actions is likely to help raise your credit score?
Question 1 options:

Make only the minimum credit card payment each month.


Increase the amount of debt you owe.


Pay your credit card bill on time.


Apply for a few new credit cards.

Answer 1

Pay your credit card bill on time.

On-time payments are the single biggest factor in credit scores. The other options either hurt your score (increasing debt, opening several new cards) or don’t help much (only paying the minimum keeps balances high and raises utilization).