Take out a mortgage loan to generate more credit by paying the mortgage on time every month, explains Investopedia. While getting the loan causes a small hit on the credit rating at first, maintaining a positive record of paying the mortgage on time over a particular length of time ultimately improves the score.Continue Reading
Approximately 10 percent of the credit score is due to the different types of credit being used, according to Investopedia. This includes mortgage loans, installment loans, credit cards and retail accounts. Instead of having multiple small loans and credit cards, it is often helpful to have one big purchase loan, such as a home. It helps to add to this important mix of forms of credit for the best credit history. It is important to consider the financial situation before buying a home and ending up with a mortgage to pay each month, but it can be an ideal way to build a credit history if done correctly.
Another option, and one that is slightly less risky, is getting a small loan and paying it off promptly, states Investopedia. This is good for someone who is working on his credit history but does not quite qualify for a home or other larger loan. Get a small loan and pay the monthly payments online, paying it off within the time period set. This helps to add to that mix of types of credit and is often available from different types of lenders, such as a peer-to-peer service.Learn more about Credit & Lending