Credit mix

[InfinitiG35]

What are the different categories in the credit mix? Is an auto loan considered an installment account or is it separate category of its own? I have 4 credit cards (revolving) and 4 student loans (installment) reporting and was wondering if adding an auto loan would help my score a lot.

[marty56]

Auto loan is an installment loan.  No effect on util but big effect on auto FICO score and overall credit history and mix.  Also having an auto loan (past or present) helps getting one in the future.

Also owing 25k on an auto looks diffrent to a creditor then owing 25k on credit cards upon manual review.

For me, it seems the following mix works the best:

1 Mortgage

1 Car loan

1 Visa card

1 Gas card

1 Store card.

Util reporting on one CC, mortgage, and autoloan for a total of 3 accounts reporting.

I dont know how a your score would actually be affected by adding a car loan.  It might drop at first but then go up.  I dont think it would be a uge increase though.  You may get a much better return FICO way wise lowering you CC util to bellow 10% and I can tell you from my recent experience that going from 9% to 10% util cost me 15 points on EX and knocked me out of the 760 club.

Message Edited by marty56 on 05-08-2008 02:19 PM

[RobertEG]

The pure definition of an "installment loan" is a loan taken out with definite, regular  and fixed terms, both as to amount due, and date due, usually monthly.  That is the contracted "installment" against repayment of the debt.  With that being said, any personal loan, auto loan, or mortgage is technically an installment loan.  However, FairIsaac has stated (see their Credit Education Webinar) that they do NOT score all installment loans the same.  In particular, mortgage loans, with much lower risk of default, are clearly scored differently from personal unsecured loans, which have a much higher risk of default .  Auto loans are also secured, so they fall in the middle.  Credit mix is not simply installment vs revolving.  There are gradients in both, but exaxctly what those gradients are and how they are scored is a proprietary part of the FICO algorithm that is not public informattion, so all we can offer on this site is anecdotal advice.  One thing that can bank on is the absence of any revolving credit is a FICO no-no. 

With 4 open installment loans, I would doubt that a new auto loan would have impact on credit mix.  In fact it would initiate a hard inquiry to set it up, and also affect  your %util, so would hit you in two other FICO categories, of which credit mix is the least significant.  Credit mix is only 10% of total FICO, so not a major factor even on the larger scale. 

Message Edited by RobertEG on 05-08-2008 03:29 PM

[Anonymous]

I found that most stuff is scored the same.

Mortgage is in a class by it self, score pretty lightly actually.

Non mortgage installments (auto, personal, secured, ect)
However the auto loan is probably scored differently for the auto enhanced scores.

Revolving

Consumer Finance (bad)

I may have missed some cats but I think these 4 cover the main basics. But I am not completely sure, just going by how my CR and some others reacted to these accounts.

Message Edited by ilovepizza on 05-09-2008 12:33 AM

[Anonymous]

So how exactly does FICO know what is a consumer finance account?   What flags it on the CRA reports when calculating the scores?

[Anonymous]

That's a problem since most of the time there is no flag on CRAs. If you are lucky it will identify as a comment Consumer Finance. But often I think it just shows up as installment.

When you get your MyFICO report it will identify these tradelines. Understanding what a CF installment is you might be able to identify them your self.

CF mostly is a RETAIL LOAN. Not from a bank for installments on a purchase from a retail company. It can also be a consolidations loan or extra cash loan. Most other loans are not CF. If your interest is over 20% there is a good chance it is CF too.

[RobertEG]

So the simple answer to Infiniti's question, is, no, all installment loans are not plain vanilla in FICO scoring.