topic Re: Credit Mix - What should I get? in General Credit Topics

Credit Mix - What should I get?

russum — Wed, 22 Jun 2016 12:15:35 GMT

So this is what I'm seeing on one of the credit reporting sites:

8 are regular CCs and 1 is a store card...

I don't really need any loans but should I get any to increase my credit score? It says 10% impact and that's like 65-70 points which seems a lot (unless that's not the way it's calculated)...

What's "Other Loans"? Should I get one? Should I get more than one? Should I pay them right away? Who offers them online (i.e. no need to go to a bank or provide bunch of papers/verification - a la a credit card application in a single web form with instant decision)?

Re: Credit Mix - What should I get?

takeshi74 — Wed, 22 Jun 2016 13:16:08 GMT

You should let your financial needs dictate the credit products that you use and not let score drive your decisions.

That said, there are those that get a shared secured loan for Credit Mix if they don't have installments. Don't overlook existing discussions as a resource. There are prior threads on shared secured loans if you're interested.

Also note the impact of the factor. Your screenshot and this page both indicate that it is typically 10%.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Don't sweat the smaller factors if you have issues with the bigger factors. Start on the factors with the biggest impact. If the rest of your profile is good then you really just need to build your profile with time and responsible usage versus looking for quick fixes.

@russum wrote:
I don't really need any loans but should I get any to increase my credit score? It says 10% impact and that's like 65-70 points which seems a lot (unless that's not the way it's calculated)...

It does not work that way. You're not going to instantly get 65-70 points from opening an installment. You also need to consider all factors at play. You will drop your AAoA (Length of Credit History) by opening a new account. You will incur a hard pull. You will have a new account on your reports (and many seem to overlook the impact of having new accounts). If the balance to loan ratio is high then that will impact Amounts Owed -- though not to the same degree that high Revolving Utilziation would impact Amounts Owed.

@russum wrote:
Should I pay them right away?

If you pay off your only installment you lose the benefit to Credit Mix.

Re: Credit Mix - What should I get?

Anonymous — Wed, 22 Jun 2016 17:45:09 GMT

Also, the range is 350-850, so if it was in fact exactly 10% that would only be 50 points. I have 3 different account types and I am given an A in that category by all the reports I have received. I would think no account types would be 0 points and seeing as you have 1 type, I think you are getting some points for that. If I were to guess, I would guess you might get another 20 points or so for a different account type.

Re: Credit Mix - What should I get?

RonM21 — Wed, 22 Jun 2016 23:29:38 GMT

@takeshi74 wrote:
You should let your financial needs dictate the credit products that you use and not let score drive your decisions.

That said, there are those that get a shared secured loan for Credit Mix if they don't have installments. Don't overlook existing discussions as a resource. There are prior threads on shared secured loans if you're interested.

Agree fully with this. Just be careful and smart when making these types of decisions.

Re: Credit Mix - What should I get?

Anonymous — Thu, 23 Jun 2016 01:03:45 GMT

@RM21 wrote:
@takeshi74 wrote:
You should let your financial needs dictate the credit products that you use and not let score drive your decisions.

That said, there are those that get a shared secured loan for Credit Mix if they don't have installments. Don't overlook existing discussions as a resource. There are prior threads on shared secured loans if you're interested.

+1
Agree fully with this. Just be careful and smart when making these types of decisions.

100% agree with all of the above

Dont make a move until you have read 30 or 40 past threads on installment loans....and creditguyindixie's (I think it is him)bank loan thread.

Your scores will get better ..just sitting tight.

No hurry, please.

Re: Credit Mix - What should I get?

CatOfSpades — Thu, 23 Jun 2016 06:14:22 GMT

Please do not open an account that you don't need just to boost your score. You'll get the highest boosts from aging your current accounts, paying them on time, and keeping your utilization down. That is far, far more important.

Re: Credit Mix - What should I get?

Anonymous — Fri, 24 Jun 2016 01:57:49 GMT

Unless you are planning on applying for credit in the near future (for something you actually need it for... an auto loan, mortgage, new CC, etc) there's no need to attempt to artifically boost your score at this time. Yes using the share secure loan method will yield you maybe 20-30 points, but what good are those points if you aren't going to use them for anything? I would just sit tight and garden for now and cross that bridge when you get to it.

Re: Credit Mix - What should I get?

SOGGIE — Fri, 24 Jun 2016 04:32:53 GMT

@Anonymous wrote:
@RM21 wrote:
@takeshi74 wrote:
You should let your financial needs dictate the credit products that you use and not let score drive your decisions.

That said, there are those that get a shared secured loan for Credit Mix if they don't have installments. Don't overlook existing discussions as a resource. There are prior threads on shared secured loans if you're interested.

+1
Agree fully with this. Just be careful and smart when making these types of decisions.
100% agree with all of the above
Dont make a move until you have read 30 or 40 past threads on installment loans....and creditguyindixie's (I think it is him)bank loan thread.
Your scores will get better ..just sitting tight.
No hurry, please.

And many CU's will issue share secured loans without a HP as you are literally borrowing against your own money. Yes...get the facts first. If you choose to go this route, you want to make sure that you will not take a HP and that the account reports to ALL 3 major CRA's. If you choose not to go this route, you will do well as each of your revolving accounts age. Good luck!

Re: Credit Mix - What should I get?

Anonymous — Fri, 24 Jun 2016 21:02:24 GMT

@Anonymous wrote:
Unless you are planning on applying for credit in the near future (for something you actually need it for... an auto loan, mortgage, new CC, etc) there's no need to attempt to artifically boost your score at this time. Yes using the share secure loan method will yield you maybe 20-30 points, but what good are those points if you aren't going to use them for anything? I would just sit tight and garden for now and cross that bridge when you get to it.

Blasphemy!

Re: Credit Mix - What should I get?

Anonymous — Sun, 26 Jun 2016 13:59:26 GMT

I think something that is also being ignored here about the short term score boost is that there will also be several negative impacts from the new account.

Your average age of accounts will be lowered. You will have a new credit inquiry (likely not a big deal). You will have a new account reporting (overlap with the first item). And your "proportion of balance to installment loan amount" will be too high (unless you're going to pay off a large portion immediately - which is another argument to not take out a loan just to increase your credit mix). Also, presumably but not definitely, you'll be paying interest on taking on a debt you don't need. Even if you have the money today to pay the entire loan off, if you don't and things change, you could wind up with a loan you can't pay because you took it out for an artificial boost in your credit score.

Re: Credit Mix - What should I get?

SOGGIE — Sun, 26 Jun 2016 14:58:35 GMT

I learned to only acquire what is needed. A sick feeling comes over you once a loan is paid in full as you will see a drop in score (approx 20 pts.) because the installment account is paid in full. I am not playing that game. I do just fine with my revolvers. Their are plenty of consumers who do just as well by not adding installments for the purpose of meeting the 'credit mix' trick.

Re: Credit Mix - What should I get?

Anonymous — Mon, 27 Jun 2016 11:35:30 GMT

Too often in these forums I find people overly concerned with score. Sometimes, it's for good reason... like if you have a 600 score and are aiming for an excellent credit score.

People that have a 820 score though that see a drop to 800 because they pay off a loan that freak out over it... it's really unnecessary. 780, 800, 820, 840; all of these scores are essentially identical in terms of what a creditor or lender will do for you. Adding an installment loan just to get back to 820 aside from being mentally satisfying on an individual level really accomplishes nothing.

If you're talking someone "on the cusp" with say a 720 credit score +/- 20 points, I completely understand trying to maximize things such as utilization and credit mix as a difference in score there could wind up being more significant.