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Credit Mix: How Types of Credit Accounts Affect Your Score

Credit mix is the diversity of accounts you have. A mix of loans and credit cards can help your score — but it’s much more important to pay bills on time and keep balances low.
May 14, 2019
Credit Score, Personal Finance
Credit Mix: How Types of Credit Accounts Affect Your Score
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Credit mix is one of several factors that affect your credit score. Credit scoring company FICO and its competitor VantageScore both assign importance to your ability to juggle different types of credit accounts, such as credit cards, a car loan, student loans and a mortgage.

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

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.

See how your score might change

Before you take action, use our credit score simulator to see how financial decisions may impact your score. Get your actual credit score, too.

How types of credit accounts matter for your score

Here’s a breakdown of the factors that affect your credit score. Each factor is weighted a bit differently by FICO and VantageScore, but “mix of credit types” is one of the least significant factors.

credit factors

Credit diversity does influence your score. But what it does to your score 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.)

Credit diversity does influence your score. But what it does to your score depends on your unique track record with credit.

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.

How to apply this knowledge to your credit score

If you have a long history of responsibly using only one type of credit product — whether it’s a credit card, student loans 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 score to the next level, consider adding a different product to your credit mix.

Don’t feel compelled to take on more credit if you don’t actually need the money.

If you’ve only had credit cards, try getting a credit-builder loan, available at credit unions. 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 student loans or an auto loan, choose a starter credit card that you are likely to qualify for or begin with a secured credit card, which is easy to get.

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