Credit scores are so important when you’re getting ready to purchase a home. This metric helps loan officers determine your interest rate and also which loan programs you qualify for. In this six part series were going to give you the information you need to know in order to raise your FICO® score and increase your ability to qualify for a home loan.
Step 5: Knowing When and What Credit To Apply For
A good mix of credit is the following:
- Credit Cards
- Mortgages
- Auto Loans
- Personal Loans
While there isn’t really such a thing as “good” debt maintaining a long history of good payments with various accounts is good for your FICO® score, but you still need to be cautious about the type of credit you apply for and ultimately accept. Just because having lots of credit available helps your credit score, if the account comes with fees and high interest rates then it may not be worth it.
Don’t apply for every credit offer you receive. Having multiple inquiries into your credit report can do damage to your credit score. This happens often while shopping for a car. It’s suggested to find financing first for your auto purchase and then head to the dealership.
Understanding the mix of credit accounts will ultimately help you earn a high credit score, but also help you become a more educated credit consumer.
Next Step for a Great Credit Score: Avoid Annual Fees
Miss Any Part of Our Increase Your FICO® Series? Catch Up!
Ways to Increase Your Credit Score: Part 1 Pay Your Bills On Time
Ways to Increase Your Credit Score: Part 2 Using Credit Correctly
Ways to Increase Your Credit Score: Part 3 Low or No Balances on Credit Accounts
Ways to Increase Your Credit Score: Part 4 Have a Long Credit History