One of the lesser known parts of your credit score make up is your different types of credit. Credit bureaus want to know that you have a variety of credit in different credit types. This is only 10% of your credit score but shouldn’t be ignored, because it is one of the easier areas to control.
The major types of credit include:
- Car/Installment Loan
- Credit Card
- Store Card
There are others like line of credit and some odd bills that sometimes report to the credit bureaus. But you want each of the ones above to get the most out of this 10%.
The ideal set up would be to have 1 Mortgage, 2 installment loans, 2 credit cards and 1 store card. This is a minimum. 1 or 2 more loans or cards won’t hurt you. Anything more than that could. More important than having these lines of credit is having high limits and low balances. Which relates to our previous post dealing with your Debt To Credit Ratio.
So diversify and get many types of credit to increase your credit score. Keep limits high, balances low and don’t spend too much time applying or you will get too many inquiries.