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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans

Which of the following actions is most likely to improve a client's credit score over time?

Paying all EMIs and credit card bills on or before the due date best improves a credit score. Repayment history carries the most weight, whereas many simultaneous applications, minimum-only payments and closing old accounts tend to hurt the score.

  1. APaying credit card dues only the minimum amount each month
  2. BApplying to many lenders simultaneously for new credit
  3. CPaying all EMIs and card bills on or before the due dateCorrect
  4. DClosing all old credit accounts to reduce history

Explanation

Repayment history is the most heavily weighted factor in a credit score, so timely payment improves it. Many applications create multiple hard enquiries and lower the score, and closing old accounts shortens credit history.

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