When it comes to credit repair not all credit is created equal. Consumer credit has little positive score benefit, even if perfectly managed, and a terrible downside if abused. This is not to say that you should not utilize it from time to time, but if you are using credit repair services and trying to optimize your credit scores you must be aware of the behavior of this type of credit.
Consumer credit includes store cards, furniture and electronic store loans, catalog credit lines, and personal lines of credit offered though non-bank finance companies. There can be valuable benefits to consumer credit including discounts at the point of purchase and fixed term no-payment plans. In many cases these offerings can be convenient and may offer significant savings. The key to good use of this type of credit is to understand the impact on your credit repair effort and how to mitigate the impact.
The FICO Effect
The FICO scoring model has a built in bias against consumer credit for a few simple reasons. Typically, this type of debt is more expensive and has features that the credit engineers at Fair Isaac associate with the increased potential for future default, like the no- payment plans that mature into budget straining re-payment arrangements at some point in the future. As noted above, this type of payment plan can be very convenient when managed responsibly, but for many people it does not end well.
The Credit Repair Response
If you want your credit repair program to succeed you can simply avoid this type of debt altogether. But if you decide to use it there is an easy way to insure that it will have a minimal affect on your scores. After taking advantage of the offer, just pay off the balance. This may take some planning, but if you let the balance linger on consumer debt you will find your credit repair progress stalled.