Credit score: How to diversify your credit mix strategically? Find out | Mint

Your credit score needs to be enhanced in order to secure loans and credit cards at fair rates of interest. One of the most effective means of diversifying your credit mix and how exactly it can serve to enhance your creditworthiness will be illustrated below in this write-up.

Knowing credit mix

Credit mix refers to what type of credit accounts you carry, i.e., secured credit accounts (car or house loans) and unsecured credit accounts (credit cards). Credit mix balance refers to what lenders believe is an optimal customer, and it can greatly influence your credit score. It is believed that a diversified balance indicates that you are able to handle multiple debts responsibly.

Why does diversification matter?

A diversified credit mix is one of the advantages that not only increases your score but also establishes an even credit history and credit health. The diversification notifies lenders that you are capable of managing diversified financial obligations and, therefore, are less risky. It is an advantage because individuals with a diversified credit mix generally get better interest rates and terms on a loan.

These simple habits enable someone to truly diversify their credit portfolio and advance their financial status. Hence, as the Indian economy keeps transforming, one has to stay updated on how to handle credit and ensure a diversified credit mix to remain successful.