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Established Member
johnicek
Posts: 77
Registered: ‎05-12-2013

Other Forms Of Credit

Excuse my post if this is the wrong section of the forum.

 

I've been building my credit over the past few months. It's hard to believe that just 4 months ago, I was struggling to get my "chance" at credit. I've done well so far.

 

One thing I had seen before that (From what I have seen) is a factor in your FICO is the balance between revolving (Cards) and installment (Loans) credit. Well, right now I have 100% revolving credit.

So is this true? Does it matter, and if so what's a good balance between the two?

 

And what would be a good way to get an installment line of credit that reports positives? I don't need  house, car, or student loans. I'm not sure where to start.

Moderator
09Lexie
Posts: 24,108
Registered: ‎09-13-2012

Re: Other Forms Of Credit

If you do not need an installment loan, then it would not benefit you to add credit that's not needed. There are plenty of consumers that do not have a mortgage or car and they still can manage a high credit score.
Also, keep in mind that credit mix is only 10% of your score

Excerpt from myFICO:

Types of credit in use
Credit mix determines 10% of my FICO Score

The FICO® Score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It's not necessary to have one of each, and it's not a good idea to open credit accounts you don’t intend to use.

The credit mix usually won’t be a key factor in determining your FICO Score—but it will be more important if your credit report does not have a lot of other information on which to base a score.

Have credit cards – but manage them responsibly
Having credit cards and installment loans with a good payment history will raise your FICO Score. People with no credit cards tend to be viewed as a higher risk than people who have managed credit cards responsibly.

Established Member
johnicek
Posts: 77
Registered: ‎05-12-2013

Re: Other Forms Of Credit

Just the answer I was looking for. Thanks!

 

Maybe one day down the road I'll find I need a loan on a car or something and I can expand. For 10% of a score, I'm not going to get a loan and pay interest, not for 10%!

 

Thanks again!

Valued Contributor
Gunnar419
Posts: 1,109
Registered: ‎01-23-2013

Re: Other Forms Of Credit

+1 to what the always wise Lexie says.

 

My score is in the high 700s with just credit cards and I believe there are a few MyFicoers or their family members whose scores are 800+ on credit cards alone.

Frequent Contributor
kkapdolee
Posts: 314
Registered: ‎09-17-2012

Re: Other Forms Of Credit

[ Edited ]

09Lexie wrote:
Excerpt from myFICO:

Types of credit in use
Credit mix determines 10% of my FICO Score


In a score range from 300-850 which is a 550 point range, 10% accounts for 55 points. That could easily make a difference between over and under 800.

 

Also, when myFICO says what determines what percent of FICO, which FICO score are they referring to? They have 49 different versions developed over different periods of time for different use. It's hard to believe that when FICO says 35% payment history, 30% amounts owed, etc. that it applies to every single one of the 49 versions as if the % determinants were set in stone since the beginning and they can't diverge from it. For example, A bankcard enhanced FICO score for example is supposed to put more weight on credit card history. If so, then a credit mix could easily be less important in that version. Also, if the ultimate purpose of developing FICO scores is to determine the credit worthiness of people, there is no reason to set certain % to this criteria and certain % to that criteria. Times change and peoples behavior change. What FICO thought mattered more in 98 could easily be different from what they discovered by 2008.

 

But I guess no one really knows except for the FICO score developers themselves. We're really all just guessing and it seems that FICO likes to keep it that way.

Frequent Contributor
Kratos-TM
Posts: 426
Registered: ‎05-23-2013

Re: Other Forms Of Credit

Good move OP. No need to get a loan for mixing purposes only.

Myfico scores.....
EX08... 800 (11-10-13)
EQ04... 790 (12-02-13)
TU08... 810 (12-02-13)

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

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