“Now is the time to diversify accounts,” Lin says, suggesting that those who managed to build a decent credit score in their 20s should consider adding revolving credit lines, like a mortgage or an auto loan, to their credit files.
Diversifying accounts will give your credit score a boost. As MainStreet has previously reported, credit lines fall into two major categories: installment accounts, which require consumers to pay a fixed amount each month until the balance has been depleted, and revolving accounts, which limit the line of credit, but have balances that fluctuate. Having both on the books nets more points with FICO than having only one.
But diversifying isn’t just about boosting your score, especially since taking out a large loan can cause your score to drop a bit until you’ve proven you can successfully make your payments. You’ll want to take advantage of the low interest rates available today (and the money that will save you) while you can.
“People don’t realize the value of a good score,” Lin says, pointing out that once you’re in the 750 range, there’s no need to shoot much higher. “It’s meant to be spent.”
Quinn agrees that it is all right if your score dips into the lower 700s shortly after you purchase a home, take out an auto loan or incur other debts typical for anyone starting a family. As long as you pay back your debt, your score is likely to rebound (or even increase) from the hit you may take when you first incur the credit inquiries.
“Credit reports belonging to people in their 30s and 40s are well-aged and generally large enough that taking on new debts and making small payment mistakes from time to time don't spell credit score disaster,” Ulzheimer says.