Which of the following habits is most likely to lower your credit score?

• A. Keeping your credit utilization below 30\%
• B. Making late payments on your credit cards
• C. Paying your credit card balance in full each month
• D. Reviewing your credit report regularly

Answer: (B)

Verified step by step guidance

1. Understand the concept of a credit score: A credit score is a numerical representation of your creditworthiness, which lenders use to assess the risk of lending to you. It is influenced by factors such as payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries.
2. Identify the factors that negatively impact a credit score: Among the options provided, making late payments on your credit cards is the habit most likely to lower your credit score. Payment history is the most significant factor in determining your credit score, and late payments can have a substantial negative impact.
3. Analyze the other options: Keeping your credit utilization below 30% is a positive habit that helps maintain a good credit score. Paying your credit card balance in full each month is also beneficial, as it demonstrates responsible credit management. Reviewing your credit report regularly does not directly impact your score but helps you identify errors or fraudulent activity.
4. Recognize the importance of timely payments: Late payments are reported to credit bureaus and can remain on your credit report for up to seven years, significantly lowering your score. It is crucial to make payments on time to avoid this negative impact.
5. Conclude the analysis: Based on the explanation, the habit most likely to lower your credit score is making late payments on your credit cards. This emphasizes the importance of maintaining a consistent and timely payment history to protect your credit score.