Good morning fellow steemians, and friends;
in today's installment of building your credit score we are going to be talking about increasing the number of credit accounts you have open. Let's begin below shall we?
In the world of credit this is an instance of when more equals more. Lenders, like people, tend to gravitate to popular people and credit scores. Meaning, that the more credit accounts you have in good standing make other lenders see you as capable of managing debt well. for instance i know several people who have more than 25 separate credit cards, multiple mortgages, and auto loans. Now i know, you're thinking "but doesn't that show them as being over extended on credit?" , and the short answer is NO. as long as the accounts show utilization at some point during the year the account is active(some creditors have begun checking for activity every six months). They also check to see just how much of the amount extended is utilized. To make this part work you have to be fairly good at rotating your utilization of cards to ensure all of them are being used, and the balances are kept low. To be honest it isn't as difficult as it seems. example: using two cards a month for small purchases will allow you to rotate 24 cards(accounts) in a annual cycle. That is 24 lines of credit you are keeping current and active.
This step in growing your credit score is only suggested if you have excellent skills in utilizing credit. I discourage this step for anyone who does not have the skills to manage multiple accounts from month to month. Nor should you attempt this if you cannot keep your balances low. The reason for this is, it is risky. It only takes one or two purchases to stress your credit/debt ratio. Once you cross over the threshhold of being able to pay each account off each month you become at risk of succumbing to over extending on your credit and can potentially find yourself needing to file debt restructuring, thus negating any gains you make in growing your score.
All of these steps to growing your credit score are simply tools you can use to do it. You do not need to each and every step, nor do you need to do any step that takes you out of your comfort zone. If at any time you feel stressed following any of these steps, just back it back down. a creditor won't penalize you for being responsible and allowing an unnecessary account to close. I have let an account that i really never utilized close on me and my score only suffered a minor 7pt dip for about 2 months. Then i was back on track growing my score, a little slower, but still growing it. And, if by the end of this series you find it all too overwhelming, and complicated, I will be doing a bonus 11th in the series that will explain the three must do's in order to achieve excellent credit.. so never fear, just use these tools responsibly, and do not take on more then you are comfortable managing.
that is really all i can say about this step of growing your credit. I cannot emphasize enough though....only take on what you are comfortable with. As always, i hope you found this info helpful and enjoyable. If you find my content to be of value and want more, feel free to upvote, and follow. Thank you for your time.
not that easy to find pictures of multiple accounts, so i just thought i'd show some pictures of multiple things... much nicer to look at than account statements, lol....