hi, my name is john ulzheimer and i'm acredit expert who contributes to creditcardinsider.com. if you have anyquestions for us please submit them in the comments section below. today'squestion has to do with building credit using credit cards and secured cards, orsecured cards. and the question is this: am i going to build credit faster by havingtwo credit cards or am i going to build
Discover It Card Credit Limit, credit faster by having two secured cards? is that better than having just one or neither? and the answer to the question is this: building credit, the speed at which you build credit is not accelerated because youhave five cards versus one card or two cards
versus one card. it's also not acceleratedwhether you have a credit card versus a secured card. the rate at whichyou build credit is essentially in line with the age of the accounts on yourcredit report. so if you have one account that is 10 years old, that means you have a 10 year old credit report. if you have two accounts that are two years old, it means on average you have a two-year-old credit report. and by consistently adding new credit cards or secured card to thereport, you're actually going to make that average age of your accounts lower andlower each time you do so because you're adding something that's brand new to thecredit report that's weighing down the
average age versus actually helping theaverage age. so the speed at which you're going to build credit really is notrelevant to the number of the accounts on report, it's the age of the accounts onthe report. there is one thing, however, to keep in mind: you will actually do better in your credit scores if you're able to have a nice diverse set of accounts on the report: credit cards, installment loans, other types of revolving accounts. you're actually going to do better if you have a mortgage, believe it or not. credit scoring models will reward youfor being able to manage a mortgage loan because it's such a largeobligation. it's very atypical relative to
something a credit card or a retailstore card or even a petroleum card, which are very easy to manage those because the balances are usually fairly low, but you're actually going to build a credit score faster by actually having a nice diverse set of accounts. so think about that. the age of thecredit report, which is around 15 percent of the points you score, the diversity ofthe items on the report, which is about 10 percent of the points in your score, those two categories together are worth roughly 1/4 of the points in your score. we haven't talked at all about whether you're paying them on time, howmuch debt you're in on those particular accounts... we're just talking about how old they are and whether or not you have
them. so building a good credit score and a good credit report is not all about, or only about, paying bills on time andstaying out of debt. it's tackling strategically some of thesecondary characteristics or metrics within the scoring model and one ofthose is how old is the report and the other is diversity. so certainly i wouldnot go out and apply for a car loan just to get one on your credit report. applyfor a car loan if you wanna buy a car. i certainly would not go out and buy ahome just to get a mortgage on your credit report buy a home because you really do want to buy a home. as these things start to hit your credit report over time organically justbecause that's how it's going to evolve,
your scores are going to improve if fornothing other that now you've checked some more boxes on the report regarding theage of the information and also the diversity of the information, as well. so if you have any other questions pertaining to credit or financial topics,then please submit them to creditcardinsider.com or in the comments section below. thanks for watching and have a nice day.
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