Your chances of being eligible for a home equity card can be improved by diversifying your credit. A variety of credit accounts can help you keep your credit utilization rate low. Adding more than one type of account will help you raise your credit score. You will also have a better payment history. You can find out more about diversifying your credit here. Once you have a good credit mix, you can start applying for a home equity line of credit.
It can increase your chances of getting approved for a loan
Your overall credit strategy should include mixing your credit history. Lenders appreciate a diverse range of credit accounts. Your FICO score will be higher if you have both old and new accounts. Don't open new accounts just to increase your score. It's better for you to keep a healthy credit balance and not borrow money that you can't pay back.
It's ideal to have both installment and revolving credit. It is simple to manage your revolving credit and you should make sure that you pay all of your bills on the due date. Avoid accumulating too many debts by only charging what you can afford each month. You can get a personal loan if you don't have enough installment credit. This will demonstrate lenders that you are capable and able to manage different credit types.
It can help you keep your credit utilization ratio low
Credit utilization ratio measures how much revolving credit you have used compared to credit available on your credit cards. It is usually expressed as a percentage such as 25 percent. If you have $10,000 on two cards but only $500, your credit utilization ratio would be 50 percent.
Your credit score will be affected if your credit utilization ratio exceeds 30%. There are several ways to lower your credit utilization ratio. Begin by reducing the outstanding credit card balances. The first thing you can do is to not carry a balance exceeding 50% of your credit limit. This is especially true if you have multiple lines.
Avoid making large credit card purchases. Credit card purchases of large amounts can increase your credit utilization ratio. These debts should be paid off as soon as possible to avoid falling due. This will allow you to avoid reporting high utilization rates to credit bureaus. This is particularly important if you plan to apply for a loan soon and wish to keep your highest score.