Some accounts influence your credit score more than others. When you think about it, it makes perfect sense.
Having a $300,000 mortgage is a greater responsibility than having a credit card.
Here is the order of importance/influence of type of account:
- Mortgage loans give you the most points. Always pay your home loan first and foremost. No exceptions. If you get in trouble and can’t pay all your bills, pay your mortgage on time, every time. Protect your home and your credit.
- Installment loans such as auto loans and student loans. An installment loan has a set payment and ending date. These count second for influence and importance.
- Revolving credit cards. This is ongoing credit. It is of least importance, but it is still important. Pay on time if you want a good credit score. If your score is 800 and you have one late payment on a credit card, your score can plummet by 100 points.
- Hard money loans are horrid and will negatively impact your credit score. Avoid hard money loans. These are finance company loans, cash advance loans, and payday loans that carry a high interest rate. They are rip-offs. They hurt your credit score, even if you pay on time, because only people who are “hard up” take a hard money loan.
When you understand credit, you are not at the mercy of the credit bureaus — you are in control. Create a good credit history and earn a top tier score. That way, you will save tens of thousands of dollars on everything from your mortgage to your insurance premiums. And, gain self-respect and the respect of the financial community.
Coming this fall, my new book, Build and Protect Your Credit Like the Pros. More information coming later, and not to be missed. Feel free to subscribe. I post about once/week.