If you want to keep things simple, credit can be broken into two categories that contribute to your account diversity: (1) Revolving lines of credit (
ie, credit cards)
and (2) installment accounts (student loans,
mortgages,
car loans, etc.), says Wayne Sanford, founder of Dallas - Fort Worth — based New Start Financial.
Every time you apply for a loan (
ie: credit card,
mortgage,
car loan, etc.), an inquiry to your credit is made
and that lowers your credit score a few points.