Housing Counselor Certification (HUD) Practice Exam

Which action could a client take to improve a credit score?

1. Open new credit accounts

2. Pay delinquent accounts

3. Close old accounts

4. Ignore small debts

The correct answer is: Pay delinquent accounts

Paying delinquent accounts is a highly effective action a client can take to improve their credit score. When an individual has accounts that are past due, these debts are typically reported negatively to credit bureaus, which can significantly lower a credit score. By bringing these accounts current and paying off overdue balances, the client can begin to regain a positive credit history. This action not only demonstrates responsibility and reliability to lenders but also reduces the impact of negative marks on their credit report. Credit scoring models heavily weigh payment history, so rectifying delinquent accounts can lead to an immediate and favorable change in a consumer’s credit score. Opening new accounts can lead to a hard inquiry that may temporarily lower the score, while closing old accounts can shorten the credit history and may negatively impact the score. Ignoring small debts does not address the issue and can lead to further delinquency, which would be detrimental to a credit score. Thus, paying delinquent accounts stands out as the most beneficial way to enhance a client's creditworthiness.