If you have little or no credit history, it’s difficult for lenders to decide whether you are a good credit risk. On the other hand, if you have too many brand new credit accounts or an unbalanced credit mix, it can also make you look less than credit worthy.
Your FICO® credit score — the big one lenders look at — is 15% based on the length of your credit history, 10% based on the number of new credit accounts you’ve applied for, and 10% based on the type of credit you use.
While these aspects have less impact than payment history and amount owed, it’s wise to keep a few things in mind:
Get started with credit before you really need it. Credit bureaus look at the length of your credit history and a longer history is better than a shorter one. Be selective, but get a credit account and be sure to use it responsibly.
Take it slow
While you should get started early, don’t open too many credit accounts at once. Credit bureaus view you as a credit risk if you open several new accounts in a short time. Be sure to open accounts thoughtfully based on real needs.
The type of credit you use is important, too. Credit bureaus like to see a blend of well managed credit cards, retail accounts and installment loans. Don’t open new lines of credit just to mix it up — but consider this angle as you make credit choices over time.