Multiple factors of your credit history are considered in the determination of your credit score, with 10 percent taking into account the varying types of credit that you hold. Having a good mix of credit can significantly improve your credit score.
There are four areas in which your accounts are judged. The highest-rated type of credit is for real estate – loans taken out for home purchases (mortgages) or refinancing – which is given four stars. Ranking third is the number of accounts you hold with installment credit, where the borrower pays a fixed amount every month, such as furniture, appliance or car loans. Major credit cards are given two stars, including Visa, Mastercard, American Express and Discover, while the lowest-ranked form of credit is the retail card.
Having a variety of credit, especially two major credit card accounts, signifies to lenders that you are responsible with credit, making them more likely to issue you a loan in the future. It is important to keep a good financial standing in order to get the best interest rates on various forms of credit in the future.