To those unfamiliar with the nature of credit scores, it can make perfect sense to assume that the fewer loans one has, the better their credit score will be. Indeed, having a low amount of debt is an important factor in maintaining a high credit score. Nevertheless, there is also a component of an individual’s credit score that takes into account the different types of loans one has.

How Credit Scores Work

There are several different credit reporting agencies, however the most important credit score is the one generated by the Fair Isaac Corporation, commonly known as FICO. Although FICO never releases the exact formula that they use to generate these scores, they do disclose some general parameters. For example, FICO has made it known that approximately 10% of an individual’s credit score is determined by the types of credit used. The different types of credit can include car loans, home loans, student loans, and revolving accounts such as credit cards. The more types of credit used, the higher a person’s credit score can be.

Why More Types of Credit Improves Credit Scores

Although counter intuitive, a person who has many different types of loans will have a higher credit score than a person who does not, all other factors being equal. To FICO, a person who demonstrates a reliable payment history in many different areas is inherently more credit worthy than someone who has only been responsible for a single type of loan.

Should People Take Out More Loans Just To Improve Their Credit Score?

Although being extended different types of credit improves one’s credit score, it does not necessarily mean that people should be encouraged to take out more loans just for that sake alone. The most important components of the FICO score continue to be a person’s payment history and the amount of debt that is owed. Many people continue to enjoy excellent credit despite the fact that they never borrowed money to pay for their education or their car. It is also a popular misconception that a higher score is always better than a lower one. Actually, once a person’s credit score reaches a threshold where it is considered Excellent, further improvement does not increase their opportunity to be approved for additional credit cards or to receive more favorable terms from other loans. That said, consumers who have less than Excellent credit and do not hold any credit cards can benefit from receiving opening a revolving charge account, so long as they control their debt and maintain an excellent payment history.

It is not realistic to imagine oil prices will ever return to the level where Americans can buy gasoline for $1 per gallon. This reality has compelled many to purchase more fuel efficient vehicles while trying to find cash back credit cards that offer savings on fuel. The Pentagon Federal Credit Union Platinum Cash Rewards card gives customers unprecedented savings on fuel, and some cash back on all other purchases.

For each dollar spent on most purchases, customers will receive one percent cash back, with an incredible 5% cash back on gasoline purchases that are paid at the pump. New cardholders can also take advantage of a 4.99% promotional APR on balance transfers, with no fee, that is valid for two years. After that, interest will accrue at a rate equal to the Prime Rate plus 10.74%. That is also the rate that will apply to all purchases that are not paid in full before the due date. There is no annual fee for this card, no over the limit fee, and no foreign transaction fees. read the rest of this entry… »

There are a seemingly infinite number of credit card offers on the market, with each offering a unique set of benefits and drawbacks. For some, it may be tempting to apply for every new card with the hopes of realizing discounts, sign up bonuses, or promotional interest rates. Others are skeptical of these opportunities, as they are duly concerned about the effect of new credit card applications on their credit score.

How A New Credit Card Application Impacts People’s Credit Scores

When someone applies for a credit card, the first thing that happens is that the bank makes an inquiry to one of the credit bureaus. This process retrieves the applicant’s credit history while adding a record of a new application for credit. By itself, a single additional inquiry is insignificant, yet multiple applications for new credit within a short period can have a negative impact on one’s credit score. New applications only impact the ten percent of the score that relates to recent inquiries.  Therefore, the effect is minor and is only apparent in the short term, often as little as 90 days. Many people with credit card debt avoid taking advantage of 0% APR credit card offers due to credit score fears, but for people with high interest debt, the question should be how much are a few credit score points worth. read the rest of this entry… »

Banks have always tried to capture the young adult market since they represent the next generation of high value consumers. To do so, they can offer rewards credit cards affiliated with popular brands such as MTV or Best Buy, while others feature exclusive access to sporting and concert event tickets. American Express offers its Zync card to students and young adults who want the opportunity to tailor their credit card to their individual needs.

For each dollar spent with this card, customers will earn a single point in American Express’s Membership Rewards Express program. Cardholders can also choose to add on different “Packs” to their card at additional costs. For example, The “GO” Pack adds $20 a year to the cardholder’s annual fee, while offering double points for airfare ticket purchases, as well as other travel discounts. Additional packs include the ECO Pack, the CONNECT Pack, and the RESTAURANT Pack which offer additional points for environmentally conscious purchases, telecommunications expenses, and food spending respectively. read the rest of this entry… »

Airline  credit cards have been around for a long time, but Delta and American Express have pioneered new ways to offer exclusive benefits to holders of their co-branded products. This process began with cardholders having their checked bags waived, and has now extended to nearly all aspects of traveler’s interactions with their airline. The American Express Delta SkyMiles Reserve card is available to Delta customers who want to be on the cutting edge of credit card rewards.

Upon their first purchase, cardholders will earn 10,000 SkyMiles, which will also count towards elite status in their Medallion program. After that, cardholders will earn one mile per dollar spent, with two miles being offered for all purchases from Delta. Cardholders who spend $30,000 in a calendar year will also be awarded an additional 15,000 Medallion Qualifying Miles (MQMs), and another 15,000 MQMs when reaching $60,000 of annual spending. These miles can even be gifted to friends or family if the cardholder has already attained their desired status level. read the rest of this entry… »