Which approach is effective in building a credit history?

Establishing a steady work record is an effective approach to building a credit history because it demonstrates financial stability and responsibility. A consistent employment history often indicates that an individual has a reliable source of income, which is a crucial factor for lenders when evaluating creditworthiness. Lenders typically look at an applicant’s income stability to assess their ability to repay debts. As income grows over time, individuals can manage their financial obligations better, making them a safer bet for credit issuers. This, in turn, can lead to better credit offers and improved scores over time as they manage their obligations responsibly.

In contrast, borrowing large amounts can lead to high debt levels that may not be manageable, and can negatively impact credit scores if not handled properly. Applying for multiple credit cards at once often triggers credit inquiries that can lower your credit score temporarily, signaling to lenders that you might be a higher risk. Ignoring bills until they accumulate typically leads to late payments and defaults, which severely damage credit history and scores. Thus, a steady work record lays a solid foundation for a positive credit history.