Your credit score is affected by how well you handle borrowed money. This includes factors such as your history of making payments on time, how much debt you have, the age of your accounts and how many recent inquiries there have been on your credit. Another factor is credit mix, which brings up the question of how different types of debt impact your credit.
Different Types of Debt
There are several different types of debt, and since they have different payment plans and terms, they may impact your credit differently. Some types of debt include:
Lenders usually like to see that you’ve handled more than one type of account, but this factor doesn’t have a huge impact on your score. Your credit mix is only ten percent of your FICO score.
Protecting Your Credit
No matter what type of debt you have, the most important thing to do is to make your payments on time. To be sure you don’t forget to make payments on time, you may want to set up automatic payments or put a reminder in your phone when bills are due. Avoid borrowing more than 30 percent of your credit limit on credit cards.
Keep an eye on your credit reports and make sure there isn’t incorrect information being reported. Wrong balances or wrong payment statuses can bring down your credit score and make it harder for you to get approved for credit at the best rates in the future. Dovly is an automated credit repair engine that can dispute errors for you and help you track, manage and fix your credit. Get in touch with Dovly today.