Credit Mix

Credit mix refers to the types of accounts that make up a consumer’s credit report. Credit mix determines 10% of a consumer’s FICO score. The different types of credit that might be part of a consumer’s credit mix include credit cards, student loans, automobile loans and mortgages. Credit mix has a larger impact on a score if there is not much information in the consumer’s credit file compared with having more substantial details of credit usage and repayment by the consumer.

While having a mix of different types of credit can have a positive impact on a credit score, FICO (and common sense) cautions that consumers should not apply for loans or credit cards they do not need in an attempt to improve this component of their credit score. Not only is credit mix a small part of your credit score, but opening new accounts also affects other aspects of a credit score, such as the length of the consumer’s credit history, amounts owed, and number of new accounts.

There is no way for a consumer to tell ahead of time exactly how a certain action will affect a credit score because the figure depends on the unique information within the credit report. Taking out an auto loan, for example, might have a great effect on one consumer’s score than another’s depending on how long each consumer’s credit history is, how much other credit they have available, how much debt they have and their payment history.

What’s more, creditors do not always report every account to every credit bureau, so opening a new account to try to get a better credit mix might end up making no difference in the score. Still, FICO says that consumers with responsibly managed credit cards in their credit mix tend to have higher scores than consumers with no credit cards in their credit mix.

It is not uncommon for a consumer to begin their credit history with a student loan, followed by a small personal loan or credit card with a small available balance. As they enter the workforce, and earn incomes, consumers typically take on additional forms of credit to accommodate their needs. This can include applying for credit cards with higher available balances and mortgages to let them purchase homes. With the introduction of each new form of credit, the consumer’s history will reflect that the mix is growing more diverse. By maintaining different types of credit over longer periods, they can retain this credit mix, which may show an overall greater sense of responsibility with such finances.