Why is credit mix important?

[Anonymous]

I never understood what made credit mix so important in determining your score. Why should it matter if it is revolving credit or an installment loan? If you pay your debt on time and show responsibility with your money isnt that enough? Just curious so if anyone has any input that would be nice.

Also how important is credit mix in your score?

[MidnightVoice]

Fico score is a statistical model.  Statistically, people who have a credit mix turn out to be better risks than those that don't.

[haulingthescoreup]

Credit mix is ten per cent of your score. And we've seen posts by those with high scores and long histories that hint that current open mortgages and installment loans might not be important for that group.


What's in Your FICO Score

[Anonymous]

besdies maybe car loans,  mortgages, or personal loans what are some other installment loans. I plan on never having a car payment and definitly not ever getting a personal loan and there is a chance I will not need much of a mortgage loan....so does that mean I can never reach the high credit I would like just because I dont have a good "mix"?

[haulingthescoreup]

Well, there are student loans as well.

One thing that many people do, especially if they already have a balance on a credit card, is to get a loan from a local credit union for $1,000, pay down/off the CC, and pay the loan off over a period of one year. With a low borrowed amount and relatively quick repayment, the interest expenses might not be that bad. Also, some lenders will allow you to repay $900 (for instance) right away and then drag out the rest. That would certainly minimize your interest expense.

If you were interested in something like this, I would visit a local credit union, or a local bank if these still exist, and explain exactly what you're trying to do.

[Anonymous]

Would an overdraft loc show up on a credit report, even if never used?

[fused]

Yes, my wife's OD LOC has been reporting forever and she never uses it.

[Anonymous]

thanks.  I was thinking that a loc would add to credit mix, but it counts as just another revolving account, doesn't it?

[marty56]

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@Anonymous wrote:
thanks.  I was thinking that a loc would add to credit mix, but it counts as just another revolving account, doesn't it?

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Yes,my BofA (PIF and will never use) LOC shows as revolving and is added to my available credit.