Key takeaways about credit mix:
- Your credit mix (the types of credit accounts on your report) plays a role in your overall credit health.
- There are two primary types of credit: revolving and installment.
- Having a diverse blend of credit accounts shows lenders that you can handle different types of debt and financial responsibilities.
- Credit mix alone won’t boost your score significantly. It works best when combined with on-time payments, low credit utilization, and a long credit history.
They say variety is the spice of life. On your credit report, that variety is known as your credit mix, and it factors favorably into a higher credit score.
Most people focus on the big things like payment history and credit utilization when they’re trying to boost their score. But the types of credit accounts you have also play a role in your overall credit health.
While it might not be the most significant factor, a well-balanced credit mix can show lenders you’re a responsible borrower. It can also help you build a stronger financial future.
So, what exactly is a credit mix? And how does it impact your credit score? Let’s break it down.
Maintaining a low balance and making on-time payments are key to keeping your credit in good shape.
What does credit mix mean?
Your credit mix refers to the different types of accounts listed on your credit report. There are two primary types of credit:
- Revolving credit. This includes accounts like credit cards and lines of credit, where you have a set limit but can carry a balance from month to month.
- Installment credit. This includes loans that have fixed monthly payments and a set repayment term. Auto loans, personal loans, student loans, and mortgages fall into this category.
A healthy credit profile typically includes each of these credit types. Lenders and credit scoring models, such as FICO® and VantageScore®, like to see that you can manage multiple types of credit responsibly.
Why does credit mix matter to your credit score?
Your credit mix makes up about 10% of your FICO® score. That may not seem like much, but it can still make a difference – especially if you’re trying to improve your credit. Having a diverse mix of credit accounts shows lenders that you can handle different types of debt and financial responsibilities.
Here’s how it helps:
- Demonstrates experience. If you’ve successfully managed different types of credit, lenders may see you as a lower-risk borrower.
- Shows responsibility. A combination of revolving and installment credit suggests that you can handle both short-term and long-term financial commitments.
- Adds to your credit history. More types of credit accounts (when managed responsibly) contribute to a well-rounded credit profile.
However, credit mix alone won’t boost your score significantly. It works best when combined with on-time payments, low credit utilization, and a long credit history.
Different types of credit accounts and their impact on your credit score
Let’s take a closer look at the different types of credit accounts that can appear on your credit report and how they contribute to your credit mix.
Credit cards (revolving credit)
Credit cards are one of the most common types of credit. They give you access to a line of credit that you can use, pay off, and reuse. Maintaining a low balance and making on-time payments are key to keeping your credit in good shape.
Impact on credit mix: Credit cards help show responsible management of revolving credit, but high balances can hurt your score.
Retail store cards (revolving credit)
Store credit cards work similarly to traditional credit cards but are usually limited to a specific retailer. They often have higher interest rates and lower credit limits, making it easier to rack up debt if not managed carefully.
Impact on credit mix: Store credit cards can help diversify your accounts, but too many can lower your average account age. This may negatively affect your score.
Auto loans (installment credit)
With an auto loan, you make fixed payments over a set period. Successfully managing an auto loan can demonstrate your ability to handle long-term debt.
Impact on credit mix: Auto loans add to your variety of credit types and can strengthen your credit score if paid consistently.
Mortgages (installment credit)
A mortgage is one of the biggest financial commitments you can make. It’s a long-term installment loan that can boost your credit history and demonstrate strong financial responsibility as long as payments are made on time.
Impact on credit mix: Mortgages are a major contributor to a well-rounded credit profile but require long-term financial commitment.
Student loans (installment credit)
Student loans function like other installment loans, with fixed payments over time. Many borrowers start their credit history with student loans, making them an important account type in your credit mix.
Impact on credit mix: Student loans can help build credit history and payment consistency. They can also be a financial burden if payments aren’t managed properly.
Personal loans (installment credit)
Personal loans can be used for various expenses. Like other installment loans, they come with fixed payments. They can help diversify your credit mix, but too many loans can increase your debt load and affect your credit utilization.
Impact on credit mix: Personal loans add installment credit to your profile. Like all other loans, they should be used responsibly to avoid excessive debt.
Home equity loans & lines of credit (installment/revolving credit)
A home equity loan is a second mortgage with fixed payments. A home equity line of credit (HELOC) works like a credit card with a borrowing limit. These accounts use your home as collateral, making responsible management especially important.
Impact on credit mix: Home equity loans and lines of credit can improve credit diversity. Missed payments can result in serious financial consequences.
Do you need a perfect credit mix?
Not at all! While having different types of credit accounts can help your score, you don’t need all of them to have a strong credit profile. If you’ve only had credit cards so far, you don’t need to rush out and take on a loan just to diversify. Instead, focus on:
✅ Paying bills on time.
✅ Keeping credit card balances low.
✅ Maintaining long-term credit accounts.
✅ Applying for new credit only when necessary.
If you already have a mix of credit but your score isn’t where you want it to be, it may be time to evaluate whether your current accounts are working for you.
Not sure about your credit mix? CredEvolv can help!
If you don’t know whether your credit mix is helping or hurting your score, the CredEvolv platform is here to guide you. You’ll connect with a certified, nonprofit credit counselor who can analyze your credit report, clarify your current situation, and offer personalized recommendations on how to improve your financial standing.
Here’s what you can expect when you enroll:
✅ Credit report review. Get insights into your current credit mix and how it affects your score.
✅ Customized credit strategy. Learn which types of credit could strengthen your profile.
✅ Dispute assistance. Are errors on your credit report affecting your score? Our counselor partners can help you address them correctly and effectively.
With the right mix of credit and a solid financial strategy, you can work toward a stronger credit score and greater financial freedom.
Final thoughts
While credit mix is only one piece of your credit score puzzle, it can still make a difference. A diverse blend of responsibly managed credit can help you demonstrate financial stability and boost your overall credit health.Get expert guidance on improving your credit mix from CredEvolv today! Our platform and the credit counselors on it are available to support you every step of the way. Get started now and get in the mix with a credit profile you can be proud of!