We have all heard that “variety is the spice of life” and have tried to indulge in such experiences as food, wine, retirement portfolios and experiences. A little known fact is that by diversifying the types of credit lines a consumer has, the stronger their credit score can be.
The Fair Isaac Corporation is a Minneapolis-based company that developed the FICO scoring formula. It is an equation that combines five consumer behaviors in relationship to how they handle their debt. The result is a score ranging between 300-850. The higher the score, the better rates an individual will be offered when applying for loans of any type or size. It is important that consumers focus their efforts and maintaining a healthy FICO score to get the best financial opportunities available to them.
The assortment of credit lines a consumer has accounts for 10% of their FICO store. This variety will prove to the credit bureau that a candidate has the ability, skills and resources to handle all types of debt. By maintaining a timely and solid repayment history for loans such mortgages, store cards and personal loans one can increase one can establish a solid credit history.
In general, there are several things a person can do to start increasing their credit score. One such act is making sure that there are a variety of credit lines to choose and use at any give time. Not only should consumers have debt in the form of credit cards they should also have a history of handling installment loans, like car payments, responsibly.