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    What Is A Credit Mix And How Can It Help Your Credit Score?

    There are many types of credit - from bank-issued and retail credit cards to installment loans and mortgages - and having a variety of these accounts can help boost your FICO numbers. 

    While it’s never a good idea to have more debt than you can afford, it’s definitely beneficial to have more than one type of credit account that reports to the three main credit bureaus

    In this article, we’ll take a look at the concept of a credit mix and give you some tips for achieving the perfect balance to boost your score. 

    Credit Mix Definition

    You may have heard or read about having the right credit mix - but what does it really mean? It’s simple: the variety of credit accounts that you have accounts for 10% toward your FICO score

    • The credit bureaus like to see a variety of borrowing products on your profile - as long as they are all paid on time and your balances aren’t too high. 
    • Having more than one type of account sends a message to the bureaus and to prospective lenders: you’re an experienced borrower who knows how to manage multiple accounts with ease. 

    If you only have a credit card or personal loan right now you may be losing out on extra points that could help you qualify for loans or lower your APRs. 

    The Types Of Credit

    One of the reasons why having different types of accounts helps your FICO score is that revolving and installment credit work differently. If you can manage both types, you’re probably a seasoned and responsible borrower. 

    • Revolving credit doesn’t have a set date by which the amount you borrow needs to be repaid - as long as you pay your minimum monthly amount. You can borrow as much as you need to up to a predetermined limit. Credit cards are a good example. 
    • While you don’t need to pay down revolving credit to meet the terms and conditions of your loan, it’s always good to keep your balances at less than 30% of your limit. otherwise, your credit score may drop. 
    • Installment credit involves a lump sum that you borrow and repay in equal monthly payments over a set period of time until the loan is retired. Personal loans are a common example that you may have used in the past. 

    How A Credit Mix Impacts Your Credit Score

    While installment loans test your ability to make substantial monthly payments reliably, revolving credit lets you demonstrate that you can keep your balances low and use your credit cards responsibly. 

    The credit bureaus will reward you for this positive behavior by raising your credit score - both for on-time payments and the mix of accounts you currently have.

    • Credit mix counts 10% toward your FICO score along with several other factors: payment history (35%), credit utilization (30%), age of credit account (15%), and recent credit inquiries (10%). 
    • You can boost your credit score by adding a credit card to your mix if you only have a loan - or vice versa. 
    • If you’d like to pay down your card balance to reduce credit utilization (a big factor in your score), you may want to consolidate it by using a personal loan with a low APR. This could help you raise your score from two different angles. 
    • It’s important to note that payday and title loans don’t count toward your credit mix - and they often come with very high APRs. Before you add a new credit account, you’ll want to ensure that the provider reports your payment activity to at least one of the three main bureaus: Equifax, Experian, or TransUnion. 

    Be Careful Of Overdoing It 

    Like all things in life, your credit mix needs to be a fine balance. Applying for additional credit comes with advantages and drawbacks - and you’ll want to watch out for these. 

    • While improving your credit mix can boost your FICO score, you shouldn’t opt for this strategy if you’re struggling to pay your existing debts. Paying down your card balances will probably have a bigger positive impact on your numbers. 
    • New credit applications can cause your score to drop by several points - and that’s why it’s best to apply for one type of credit at a time. For example, you’ll want to wait several months between applying for a credit card and a personal loan. 

    If your credit situation is currently stable and your utilization is under 30%, you may want to go ahead and apply for another type of account - possibly with the lowest limit your lender will allow. 


    The variety of credit accounts you currently have can help boost your FICO score - as long as you manage them all well. 

    Your credit mix counts 10% toward your score. By having both revolving credit (like credit cards) and term loans (like personal loans and mortgages) on your credit profile, you may be able to boost your FICO numbers.