What Is Credit Mix and How Does It Affect Your Credit Score?

Credit scores are more than just a three-digit number. They’re a tool that lenders use to gauge how responsible you are when it comes to managing money.

Different factors go into shaping your credit scores, including your credit mix or the types of credit you use. While credit mix doesn’t have the same impact as payment history or credit utilization for FICO credit scoring purposes, it still makes a difference to your overall scores.

What Is a Credit Mix?

Simply put, credit mix refers to the different types of credit you’re using. For FICO credit scoring purposes, which are the scores used by 90% of top lenders, credit mix broadly covers these types of credit accounts;

Installment debt
Revolving debt

Installment debt includes credit accounts that you repay in installments. For example, a personal loan could be considered a type of installment debt since it’s repaid according to a fixed schedule. Other types of installment debt include car loans, student loans and mortgages.

With installment loans, you’re paying down the balance until it reaches zero, without making any new purchases or charges against your credit line. Revolving debt, on the other hand, allows you to continue making purchases as long as you have available credit. Examples of revolving debt include credit cards, retail store credit cards, in-store financing and home equity lines of credit.

Why is Credit Mix Important?

Credit mix matters because it’s one of the five elements that makes up your FICO credit score. Again, these are the credit scores most often used by top lenders. Here’s what the FICO score breakdown looks like:

Payment history = 35% of your score
Credit utilization = 30% of your score
Credit age = 15% of your score
Credit mix = 10% of your score
Credit inquiries = 10% of your score

As you can see, credit mix doesn’t carry the same weight as payment history or credit utilization. But it’s still important for FICO scoring, as lenders want to be able to see that you can use different types of credit responsibly. Credit mix is also considered a highly influential factor in the VantageScore credit scoring model, which is gaining appeal with a wider base of lenders.

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What Is a Good Mix of Credit?

There’s no specific formula that determines what constitutes a good mix of credit. Instead, lenders want to see a balance between installment debt and revolving debt.

So for example, if you’ve never had an installment debt in your name then that might work against you for credit scoring purposes where credit mix is concerned. Or if you’ve only ever had student loans and never opened a credit card, then lenders might see your credit mix as being less diverse.

Aside from having a mix of different credit types, it’s important to ensure that you’re using them properly to improve your credit. That means paying loans and credit cards on time, keeping balances on credit cards low relative to your credit limits and keeping the number of new accounts you open to a minimum.

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How to Improve Credit Mix (and Potentially Raise Your Credit Score)

Improving your credit mix could also lead to an improvement in your credit scores. If you’d like to work on diversifying your credit, first take a look at the types of accounts you already have. From there, you can work on filling in the gaps.

For example, you may have two credit cards that you use, one for travel purchases and one for everyday spending. You could round out your credit mix by taking out a small personal loan, which would give you some installment debt to repay.

Keep in mind that applying for a personal loan could cost you a few credit score points if it involves a hard check of your credit history. But if you repay the loan on time while also staying on top of your credit card payments, that could work in your favor when it’s time to recalculate your credit score each month.

If you’re interested in using a personal loan to improve your credit mix, here are a few tips to keep in mind:

Consider your budget and how much you can afford to repay toward a personal loan each month
Check your credit report and scores to get a sense of what interest rates you might qualify for
Compare lenders to find the personal loan option with the best rates and repayment terms
Before signing off on a personal loan, be aware of any hidden fees, including prepayment penalties or late fees

While credit mix may represent a smaller slice of the credit scoring pie, it’s still important to understand how this can affect your credit rating. The more you can do to improve your scores, the easier it becomes to get approved for credit at favorable interest rates.

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Rebecca Lake

Rebecca Lake is a freelance writer specializing in personal finance, credit and debt. She’s a contributor to U.S. News and World Report, Forbes Advisor and The Balance and her work has appeared online at CreditCards.com, MyBankTracker, Money-Rates.com and dozens of other top publications.