Adding a Mix to Your Credit Accounts

One great way to help boost your credit score is to have credit diversity, or a credit mix. This refers to the different kinds of credit accounts that are listed on your credit report. Here’s what you should know.

What is a Credit Mix?

Your credit mix is the variety of account types showing up on your credit report. There are two main types:

• Installment credit. A loan you borrow once and pay off in fixed payments over time. Auto loans, mortgages, student loans, and personal loans are all installment credit.
• Revolving credit. Accounts you can borrow against, pay down, and borrow against again. Credit cards, store cards, a home equity line of credit (HELOC), and personal lines of credit all fall into this category.

Having both types of credit on your report and managing them well shows lenders you can handle different kinds of credit responsibly.

See how installment and revolving credit impact your score.

How Credit Mix Affects Your Score

Credit mix is one of several factors that make up your credit score, but it’s not the biggest one. FICO weighs it at 10% of your score. VantageScore weighs it a little higher, at 11%.

Here’s the part that matters most: a good credit mix won’t help you if you’re not paying your bills on time. Payment history carries far more weight than mix in both scoring models — so if you’re deciding where to focus your energy, on-time payments come first.

How a Mix Can Help Your Score

Credit diversity is one of several factors used by credit scoring models to determine your overall credit score.

Remember, a good credit mix won’t mean much if you don’t pay those bills on time, every time. On-time payments are the biggest influence on your credit score for both FICO and VantageScore.

Do One Thing: If you’re missing one type of credit (say, you only have credit cards and no installment loan), consider adding one but only if you can comfortably manage the payment. A credit mix built on debt you can’t handle will hurt more than it helps.

*based on VantageScore 3.0