Consumers have reportedly seeing shifts in terms of the type of debts they are working to overcome, and in terms of credit card use and borrowing, there are some consumers who are relying less on credit cards but may be dealing with certain types of debt like student loans, all of which will impact a consumer’s credit score in one way or another, particularly if troubles arise where a consumer is unable to pay off their debt obligations. Obviously, many men and women who are working to improve their credit scores are usually doing so so that more affordability can be gained through lines of credit like home loans or even an auto loan but there are different aspects of a consumer’s credit score that may deserve more attention than other aspects that go into calculating the overall score a consumer has.
In one area, the types of credit that a consumer has, meaning the diversity of debts or open lines of credit in the life of an individual, will factor into their credit score but this has caused a problem in cases where consumers have attempted to acquire various lines of credit or debt is simply to diversify these credit lines in their personal financial life. Obviously, many consumers have either a mortgage, car loan, student loan, or credit cards but this does not mean that an individual necessarily needs all of these lines of credit available before their credit score will benefit.
In fact, if a consumer applies for multiple credit cards, has a high amount of debt in relation to their credit score, or makes the mistake of trying to diversify the credit lines available in their life to an extent where they have trouble repaying what they owe, these can all work against an individual’s credit score and financial health, which is one reason that financial advisers have counseled consumers to be cautious when it comes to borrowing or accessing lines of credit. Again, many consumers will have different types of credit in place even if it’s something as simple as a credit card, personal loan, or student loan, and there have been financial counselors who make the argument that this area of a consumer’s credit score, meaning the types of credit they have, will be less important than simply keeping one’s debt level low in relation to their income, keeping lines of credit that have a long history, and simply paying bills on time.
While there are some consumers who are in a position where they may have certain types of debt in their life like a credit card or student loan debt, and are also looking to get a car loan, and in terms of the amount of diverse lines of credit currently present in their lives, it may benefit their credit score slightly, but again, if a consumer has a high amount of debt in relation to their income, this could work against them in a variety of ways. In the end, consumers are often urged to focus on making responsible purchases, repaying their debts in a timely manner, and saving money in a responsible way rather than looking to get multiple lines of credit, since when it comes to a consumer’s credit score, some aspects of calculating their rating are simply minimal and, as a result, officials want consumers to make sure they focus on the big factors and make sure that they are able to honor current debts rather than seeking out different lines of credit.