Credit mix

What It Means

Credit mix is the range of credit types that appear on your credit reportCredit reportA record of how you've borrowed and repaid, kept by credit bureaus and sold to lenders, landlords, insurers and others who decide whether to deal with you. See more. myFICO lists credit cards, retail accounts, installment loansInstallment loanA loan you receive as one lump sum and repay in a set number of scheduled payments, such as a car loan, mortgage or personal loan. See more, finance company accounts and mortgageMortgageA loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term. See more loans as the types FICO ScoresFICO scoreA credit score made by the company FICO from your credit report; base FICO Scores, including the widely used FICO Score 8, run from 300 to 850. See more consider. It counts for 10% of a FICO Score, and lenders read it as a sign of whether you can manage different kinds of credit. myFICO says it isn't necessary to have one of each type.

How People Say It

• "I only have credit cards, is that bad for my mix?"
• "The car loan helped my credit mix."
• "Should I get a loan just to build credit?"

The Breakdown

A short example. Tyler has two credit cards, both paid in full every month. He reads that credit mix matters and considers taking a $3,000 personal loanPersonal loanAn installment loan, usually unsecured, that a bank, credit union or online lender pays out as a lump sum you can use for almost any personal purpose. See more he doesn't need, planning to pay it off slowly to add an installment loan to his report.

Where it goes wrong. Credit mix is 10% of a FICO Score, the same weight as new credit, and myFICO says it most likely won't decide whether a lender approves you. The loan would bring a hard inquiryHard inquiryA check of your credit report by a lender after you apply for credit; it shows on your report for up to two years and can lower some scores a little. See more and a brand new account, which lowers the average age of his accounts, and he'd pay interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more on money he didn't need. myFICO warns that opening many new accounts in a short time can suggest financial trouble to lenders.

What to watch for

• Let your mix grow from loans you actually need, like a car loanCar loanAn installment loan used to buy a vehicle, repaid in monthly payments over a set term, with the vehicle as collateral. See more or a mortgage.
• Keep paying every account on time, since payment history outweighs mix more than three to one.
• Remember that closed accounts can still show on your report and still describe your history.

Good to Know

myFICO says the five weights describe the general population, and how much each factor matters depends on your own credit profile. VantageScore uses its own factors and weights, so the 10% figure applies to FICO Scores only.

Related Terms and Categories

• Credit score

  A three-digit number calculated from your credit report that lenders use to judge how likely you are to repay; common models run from 300 to 850.

• FICO score

  A credit score made by the company FICO from your credit report; base FICO Scores, including the widely used FICO Score 8, run from 300 to 850.

• Installment loan

  A loan you receive as one lump sum and repay in a set number of scheduled payments, such as a car loan, mortgage or personal loan.

• Revolving credit

  Credit you can borrow, repay and borrow again up to a set limit, such as a credit card or a line of credit.

• Length of credit history

  How long you've been using credit, measured by the ages of your oldest, newest and average accounts; it makes up 15% of a FICO Score.

• Hard inquiry

  A check of your credit report by a lender after you apply for credit; it shows on your report for up to two years and can lower some scores a little.

Debt and credit