How can a borrower enhance their credit score effectively?

A borrower can enhance their credit score effectively by paying bills on time, reducing debt, and avoiding new credit inquiries because these actions directly contribute to a positive credit history and lower credit utilization, both of which are significant factors in credit scoring models.

Paying bills on time shows lenders that the borrower is reliable and responsible, which builds trust and improves the payment history component of the credit score. Reducing debt, especially high revolving credit balances, lowers the borrower's credit utilization ratio—a key metric that reflects how much credit is being used compared to the total available credit. A lower credit utilization ratio can result in a better credit score as it indicates to lenders that the borrower is managing their credit responsibly. Additionally, avoiding new credit inquiries is important because each inquiry can temporarily lower a credit score. By minimizing these inquiries, a borrower can maintain a steadier and more favorable credit profile.

The other options, while they may seem beneficial, do not directly align with the most effective strategies for improving credit scores. For example, consolidating debts might help with management but doesn't guarantee an improvement in the score itself. Applying for multiple credit cards can lead to more inquiries and increased risk, while increasing outstanding balances is detrimental to a credit score.