Question

of the following statements, which one or ones describe actions helpful to your credit score?

i. quickly paying off debts
ii. having recent debts
iii. having long-standing lines of credit

a. i only
b. ii and iii
c. i and iii
d. iii only

Explanation:

Analyze statement I

Using the Credit Score Impact knowledge point

• Paying off debts quickly demonstrates responsible financial behavior and reduces your credit utilization ratio.
• A lower credit utilization ratio and a history of timely payments positively impact your credit score.
• Therefore, Statement I describes an action helpful to your credit score.

Analyze statement II

Using the Credit Score Impact knowledge point

• Having very recent debts, especially multiple new accounts or high balances, can indicate increased financial risk.
• Opening new accounts leads to hard inquiries, which can temporarily lower your credit score.
• Therefore, Statement II is generally not considered helpful to your credit score.

Analyze statement III

Using the Credit History knowledge point

• The length of your credit history accounts for a significant portion of your credit score.
• Having long-standing lines of credit shows a long, established track record of managing credit responsibly.
• Therefore, Statement III describes an action helpful to your credit score.

Determine the correct option

Using the Credit Score Impact and Credit History knowledge points

• Since Statements I and III are helpful, the correct combination is "I and III".
• This corresponds to option c.

Answer:

• a. I only
• b. II and III
• c. I and III (Correct answer)
• d. III only