Page 54 - Winning The Credit Game Bundle (CK Patrick)

42 THE CREDIT GAME

because these are somewhat rare, and can be highly risky since it is
easier for financial shortfalls to harm your credit score instead of
helping it with this type of account. This type of account is not neces-
sary to build credit rapidly, so I don’t necessarily recommend it to my
clients on the personal side. Instead, you may be better off simply
opening another ordinary credit card once your credit score moves into
the “good” range and you can qualify for low interest rates.
But because this is a type of account recognized by credit bureaus
as a potential skill demonstrator, I wanted to let you know that these
types of accounts exist and can speed up your credit building process
if you don’t have the kind of financial uncertainty that can lead to a
missed payment.

MORTGAGE ACCOUNTS

Mortgage accounts, like open accounts, are an expert-level skill. They
are considered separate from other types of loans because they may
have special terms such as variable interest rates. The possibility that
your interest rates may change in some mortgages, as well as the sheer
size of the loan they represent, makes them another expert-level skill.
Like open accounts, I don’t recommend that people take on a mort-
gage just to optimize their credit mix. Mortgages come with a lot of
risk of harm to your credit score if you can’t pay them, and as with
open accounts, you are unlikely to qualify for favorable interest rates
until after your credit is already good. As we discussed in a previous
chapter, a poor interest rate on a mortgage can cost you over $100,000
in payments you could have avoided over time in some cases!
So if you don’t already have a mortgage, don’t go out and get one
just to build your credit score faster. Wait until you have a good credit
score that can get you a good interest rate and other favorable terms
upfront. But if you do already have a mortgage, know that this is also
counting positively toward your credit mix. You are showing real skill
by paying that off!