What should an individual do to maintain a healthy credit score?

Maintaining a healthy credit score is crucial for securing loans at favorable interest rates and achieving financial stability. Making payments on time is one of the most significant factors that influence a credit score. Payment history accounts for a large portion of the score calculation; consistently paying bills when they are due demonstrates reliability and responsible financial behavior. This punctuality reflects positively on the credit report, which can lead to a higher credit score.

Options that suggest maximizing credit card balances or frequently applying for loans can lead to negative implications for credit scores. High balances can increase the credit utilization ratio, which negatively affects the score. Frequent loan applications may generate multiple hard inquiries on a credit report, which can also lower the score temporarily. While keeping credit accounts open can be beneficial for maintaining an active credit history, it must be balanced with responsible management of debts. This makes on-time payments the foundational action for preserving a healthy credit score.