Your credit score is reflected upon five credit categories. Such as Payment History, Debt, Length of Credit History, and new credit and credit mix.
When applying for new credit the lender first determines wether you have paid off previous account, let items get sent to collections, had late payments, etc.
Having accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low Score. However, if you are using more than 30% of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of defaulting.
In general, a longer credit history with positive accounts will increase your Scores. However, even people who haven't been using credit for long may have high Scores, depending on how the rest of their credit report looks.
Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not a necessity to have all of the accounts above it is just an example to different accounts in your credit report.
Research shows that opening several credit cards, installment loans, retail cards in a short amount of time represents a greater risk, Unfortunately for people who don't have a long credit history(5 years+). If you can avoid it, try not to open too many accounts too rapidly within the same time period.
You can leverage great scores into great deals — on loans, credit cards, insurance premiums, apartments and cell phone plans, mortgage loans, and etc. Bad scores can hammer you into missing out or paying more interest. Paying less interest is beneficial for you because it saves you money! Paying a higher interest rate is money that is not benefiting you and wasting your money with higher premiums, deposits, and makes you a High-Risk to defaulting.