What is the right mix of accounts to achieve the most credit points towards a credit score? #AccountMix Maintaining at least several Revolving Accounts (credit cards), along with an Installment Account (any type of loan), goes a very long way towards an improved credit score.
Using the Authorized User trick, or Piggybacking, can still help improve credit scores quickly by getting added to the right credit card(s). This would help with the Revolving Accounts portion of the Account Mix Factor of a credit score. See Screaming Lincolns video on using Authorized User method, or Piggybacking, to boost score quickly here: #CreditScoreHack
Installment Accounts are more difficult because there is no Authorized User trick for loans. The only option is Joint Account Ownership or having a cosigner. However, there are loan options that satisfy the Installment Account portion of the Account Mix Factor of a credit score that *DO NOT REQUIRE ANY CREDIT HISTORY* like SelfLender, now called SELF. See Screaming Lincolns video on using Credit Builder Loans to get an Installment Account reporting in a credit history here:
The downside to Installment Accounts is they often come with mandatory costs like interest, origination/adminstrative fees, etc. However, the SelfLender option discussed in link above has a monthly cost of just a few dollars per month for their 12-month plan. No one likes giving away money, but for some Consumers looking to build or rebuild their credit, this can be a suitable option. #InstallmentAccount
Once an Installment Account is reporting, along with several Revolving Accounts, the next step is to make timely payments. Installment Accounts loans) are simpler because their payments are fixed and can be easily set to auto-pay. Revolving Accounts (credit cards) are trickier. Some people just open a few cards in their name or use the Authorized User trick by Piggybacking onto a couple cards and don't put any activity on the cards. This is a bad approach towards optimizing credit scores because *no payments are being reported* and possibly risk being closed due to inactivity. See Screaming Lincolns video on how to maintain Revolving Accounts with low-recurring transactions and auto-pay here:
So how is your credit profile? Do you feel you do or don't have the right mix of accounts? Let me know of your experience with opening or closing accounts and their effect on credit scores in the Comments!
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~Cap
DISCLAIMER: I have NO affiliation or agreement with any of the other Lenders or Entities discussed in this video.
DISCLAIMER: This video is for informational purposes only. Consult a licensed finance professional or credit specialist as needed.
DISCLAIMER: All information presented here has not been reviewed or approved by any of the Lenders discussed in this video.
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