Is credit mix always helpful?

Is credit mix always helpful?
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#1

Hello all!
I am in my mid 30s and have maintained credit scores between 780-810 for the past few years. I have never had a loan or a mortgage, but do have 4 credit cards with perfect payment records. I have a cousin in a very similar situation who is applying for a mortgage (good credit but only from credit cards). He was advised despite a score over 800, there could be concern over a “thin file” with no installment history.

So my question is, should I look into more credit “mix” options? If I want a mortgage in the next 5 years, would it help to do a credit builder loan? Everything I read about them says they are excellent for repairing credit, but I couldn’t find any information on improving already excellent rated credit. I have savings i would be happy to secure a loan with as well - if it would actually help my score and better prepare me for mortgage rates.

Thanks for any help in advance!


#2

Hi @Latenight,

Thanks for your question! I’m in the same boat as you (only ever had credit cards) and as a credit writer at NerdWallet, I’ve also considered getting a loan to mix it up. Credit mix is not as important as paying on time and keeping your utilization low, but a mix of loans and revolving accounts doesn’t hurt. (as long as you can afford the payments, of course).

I was going to get a credit-builder loan myself, so you are on the right track. You don’t need to secure it, because with your score the lender probably wouldn’t need the extra deposit.

As luck would have it, I needed to buy a car and recently applied for an auto loan instead. What may be helpful to you: I applied for credit by myself (without my husband, who has a longer history and has had a car loan before) and I got rejected! The lender said one of the reasons was “Lack of recent installment loan information” even though I have excellent credit.

In the end, my husband and I applied for a joint loan and qualified together.

Here’s more info on credit-builder loans and the importance of having a credit mix

Let us know what you decide and if you have more questions!