Which action can help improve an individual's credit score?

Paying bills on time is a crucial action that significantly enhances an individual's credit score. Payment history is one of the most significant factors in credit scoring models. When an individual consistently pays their bills, including credit cards, loans, and utility bills, on time, it reflects reliability and financial responsibility to lenders. This positive behavior contributes to a higher credit score because it demonstrates the individual’s ability to manage debt and fulfill financial obligations.

Timely payments establish a strong track record, which can offset any other negative items on the credit report. The importance of maintaining a good payment history cannot be overstated, as late payments or defaults can adversely affect a credit score and remain on the credit report for several years.

The alternatives to paying bills on time do not positively impact credit scores and demonstrate behaviors that can lead to lower scores. For instance, maximizing credit card limits could imply a higher debt burden, while missing payments directly leads to missed obligations and penalties. Closing old accounts might reduce available credit and shorten credit history, which can negatively impact a credit score as well. Therefore, consistently paying bills on time stands out as the most effective action to improve credit scores.