What Is Credit Mix and How Does It Affect Your Score?

Credit mix is the diversity of accounts you have. A mix of loans and credit cards has a small effect on credit scores.
By NerdWallet 
Edited by Sheri Gordon

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Credit mix is one of several factors that affect your credit score, and credit scoring companies FICO and VantageScore both consider it to gauge how you've handled different types of credit.

What is credit mix?

Credit mix is the diversity of your accounts. The collection can include:

  • Revolving credit, which comes with a credit limit, and unpaid balances carry over into the next month. The most common example of revolving credit is credit cards.

  • Installment credit, which is paid back in steady increments over time. Examples include a car or student loan, or a mortgage.

While it’s perfectly OK to accumulate a mix of revolving and installment credit over time, going out and applying for several products to try to beef up your score may not move it by much. In the short term, having several hard inquiries on your credit caused by applying for new products will harm your score and it may cancel out the positive effects of diversifying your credit types.

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How important a factor is credit mix for your scores?

Credit mix is a far less important factor for your scores than paying all your bills on time and using less of your available credit limits, a factor known as credit utilization.

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Factors that affect your credit scores are weighted a bit differently by FICO and VantageScore, but “mix of credit types” is one of the least significant factors.

How credit diversity influences your scores depends on your unique track record with credit.

For example, you and a friend could have the same types of credit accounts — say two credit cards and a student loan each — for the same number of years. But if you always make your minimum payments on time while your friend is often late, your scores will differ a lot. (You won’t be surprised to learn your friend’s score is probably much lower than yours.)

If both of you are approved for an auto loan and add it to your credit mix, the effect on your scores will be different.

Although there appears to be a degree of simplicity involved in the types-of-credit category, it's actually rather complicated to quantify the actual effect on your score. It isn’t just the number of each type of account you have, but how each account relates to others among all categories, and how they interrelate with the other score factors.

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How to diversify your credit mix

If you have a long history of responsibly using only one type of credit product — whether it’s a credit card, student loan or an auto loan — you likely have a good credit score already. (For credit cards, keeping your credit utilization low is also important.) Don’t feel compelled to take on more credit if you don’t actually need the money.

But if you want to take your scores to the next level, consider adding a different product to your credit mix.

If you’ve only had credit cards, try getting a credit-builder loan. The money you borrow is put into a separate bank account and you pay the lender every month. When the loan term is over, you can access the money. This has a triple benefit: It adds an installment loan to your credit mix, helps you build your credit history and also helps you set aside money for a financial need.

If you have only a student loan or an auto loan, consider a starter credit card that you are likely to qualify for — or begin with a secured credit card, which is easier to get.