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Variety is the Spice of Credit

05/15/24

Your credit score is based on a wide variety of factors: Your payment history, how much credit you currently have, how much of that credit you are using, types of credit you are using, etc. We all know paying our bills on time can boost our credit scores, but did you know that having a mix of credit types could also help improve your score?

Credit scoring models favor people with a variety of types of credit: A mortgage, auto loans, and credit cards. Too much of one type of credit can negatively impact your score. In addition, revolving credit (meaning you can borrow money as you pay down your balance as with credit cards) tends to impact your score more negatively than an installment loan, like a car loan.

So, if you want to improve your score and need to borrow money, consider taking a short-term bank loan instead of taking a cash advance from a credit card. Adding some variety to your credit life may spice up your credit score.

Personal – Saving, Planning & Budgeting

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This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.