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Does the "mix" really matter?????

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Super Contributor

Re: Does the "mix" really matter?????


@Thomas_Thumb wrote:

[Relative to the OPs question - it is well known that an exceptional credit mix is NOT needed for top scores. Heck a recent post, by Ubuntu, on MyFico stated he had an 850 Fico 8 score with no open or closed installment loans in his credit file]. Short cut to post provided below.

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Our-Forums-FICO-High-Achievers-Who-has-at...

 

From the above posts with exceptional ratings both have more than 20 accounts on file - heck more than 20 revolving credit card accounts alone. Also both have a combination of installment loans (open/closed). Mix does consider closed accounts.

 

Outside of some potential preferred mix ratio it sure looks like a high QTY of accounts [cards] may be needed to be "Fico exceptional". Perhaps the CK table recreated below is not too far off if count is king. Smiley Indifferent

 

21+

EXCELLENT

11-20

GOOD

6-10

POOR

0-5

VERY POOR

 

So far no definitive answer on whether multiple loan types are needed for Exceptional rating and whether a charge card helps - Both posters with Exceptional rating have these in their file history.

 

Below is an article I came across speaking to mix.

 

Do You Really Need to Worry About Your Credit Mix?

 

 

Which types of accounts increase your credit variety?

If you want to keep things simple, credit can be broken into two categories that contribute to your account diversity: (1) Revolving lines of credit (ie, credit cards) and (2) installment accounts (student loans, mortgages, car loans, etc.), says Wayne Sanford, founder of Dallas-Fort Worth–based New Start Financial.

 

Why does FICO reward those who have both? Keeping up with installment loans demonstrates the reliability lenders like – but these loans also come with a big incentive to make payments on time (they’re often secured with your house or vehicle). Revolving accounts give you a lot more freedom to fail, since you don’t run the risk of losing the things you bought with them.

 

The idea is to show lenders that you can handle both levels of responsibility.

 

Within revolving and installment credit accounts, there is a wealth of other account types: store credit cards, charge cards, auto loans and mortgage loans. So does having, say, a store card and a card issued by your bank contribute to your credit variety? No, according to Sprauve.

“The score doesn’t see your Sears or Macy’s card differently than another credit card,” he says.

 

As for charge cards, FICO does view them differently from regular revolving cards, and they would therefore contribute to your credit mix, Sprauve says. There’s just one complication: Cards marketed as charge cards don’t always report to the bureaus as charge cards. If it doesn’t show up as a charge card on your reports, it won’t be factored into the credit mix portion of your FICO as a different type of card.

 

“It’s hard to distinguish between how the card is marketed and how it’s reported,” Sprauve says.

 

What about closed accounts? Does that car loan you paid off or that card you closed still factor into your credit variety? Closed accounts stay on your reports for between seven and 10 years (depending on the circumstances), and, during that time, they will continue to get factored into your credit mix, Sprauve says.

 

Is there an ideal credit mix?

There’s no magic combination of ingredients for the perfect credit mix salad. Nor does FICO like certain ingredients more than others. The way FICO sees it, having a credit card and a car loan is just as good as having a credit card and a mortgage.

 

“The score is looking at the mix,” Sprauve says. “It’s seeing that this person has two types of credit, or this person has three types of credit, or this person has one type. But it’s not ranking one type of credit higher than another.”

 

A rule of thumb, Sanford says, might be to shoot for two or three revolving accounts for every installment account (while not going overboard and digging yourself into debt, of course). But even that combo might not be the best solution for every consumer.

 

“Every credit profile is a thumb print, and every thumb print is different,” Sanford says. “What will affect one person one way won’t affect another person the same way. It’s a loose-fitting formula.

 


Excellent info from the article Tomthumb. I know my util needs to come down more but nothing i can do about credit age. This was from the last report i got from fico so it is growing. I also have not applied for anything in the last 3 months so im sure this will help eventually. My thinking is once my Average age hits 2years then i will finally get some points from that catagory. As im certain im not getting a single point from credit age which accounts for 15% of a fico score. How im over 700 is perplexing at best. Maybe payment history. not sure. You have 850 scores across the board so you are doing everything right and your advice is extremly valuble to those of us trying to raise their scores.

Message 21 of 63
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Re: Does the "mix" really matter?????


@NRB525 wrote:

Mine has Exceptional.

 

This would not include the PRG, the only "charge card" though that probably doesn't make a difference.

 


According to the FICO spokesman quoted in the link I gave above, the "charge card" adds to mix, but the "store card" does not.

Message 22 of 63
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Re: Does the "mix" really matter?????


@Thomas_Thumb wrote:

Taxi818, Look forward to the post. Can you also please tell us your ratio of revolving accounts to total accounts

(note AMEX charge cards and store cards are typically lumped in with standard credit cards for this metric).

 

Inverse - Information I have seen indicates mix does look at ratio and that revolving accounts should optimally be 70% to 80% of the total mix. I suspect you are well below 50% on this ratio particularly if closed accounts are included in the calculation


The link I gave above with quotes from a FICO spokesman indicates that "charge cards" and "store cards" affect mix differently.  I may be the right one to test this since I only have 3 major bank cards and that's it.

 

I have also seen some references recommending that revolving accounts should be 3:1 against installment.  And 50% is about my ratio.  Didn't hold me back much if any as far as I can tell.

Message 23 of 63
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Re: Does the "mix" really matter?????

Hey Taxi!  You wrote that "... I'm certain I'm not getting a single point from credit age, which accounts for 15% of a fico score." 

 

Is there any particular reason why you'd be certain that was true?  That strikes me as very unlikely.  For example, one factor from the Age category is "Age of oldest account" -- and I think you have told us elsewhere that your oldest account is a little over two years old.  Surely that's worth several points right there.  Many scorable credit profiles are less old than that, e.g. six months.

Message 24 of 63
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Re: Does the "mix" really matter?????

I said that because on either credit.com or another board it said I was not getting a single point in credit age. And I believe it. Yes. Oldest account is 2 years 1 month old. But average is only 1.2 years old. When you heard me mention this I was hoping to get points when I reached 2 years from oldest. But sadly my score did not change. Looks like the average is what counts.
Message 25 of 63
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Re: Does the "mix" really matter?????


@taxi818 wrote:
I said that because on either credit.com or another board it said I was not getting a single point in credit age. And I believe it. Yes. Oldest account is 2 years 1 month old. But average is only 1.2 years old. When you heard me mention this I was hoping to get points when I reached 2 years from oldest. But sadly my score did not change. Looks like the average is what counts.

I'd be curious to hear exactly what credit monitoring service made this claim (you think it may have been credit.com but it may have been another one too).  Also would be curious to hear exactly what language they used. 

 

It's extremely hard to get ZERO points from any FICO category.  Here's a way to think about it. 

 

The lowest FICO 8 score one can get is 300.  That's assuming you earned zero points in every category. 

 

The highest score is 850.

 

The difference is 550.

 

10% of 550 is 55.  That suggests that even in the smallest categories the range of points is (roughly) 0-55 (it may be possible to get a bit more than the theoretical max from any particular category, but let's be conservative and go with 0-55 right now).  With a 15% category the range is quite a bit higher (0-83).

 

To get 0 points from a possible 83, you'd need to be the worst one could imagine in that category.  Remember that even people who have terrible credit scores (e.g. 500) are still getting 200 or more points in the various categories.  "Age of oldest account" is a well documented factor from the "Length of credit history" category.  Your age of oldest is far better than many people.  And you believe that your AAoA is 1.2, which is certainly higher than some people.

 

You can be sure you are getting more than 0 points from this category.  Certainly you will get far more, however, when your AAoA and your AoOA are higher than they are now; that is certainly true.

Message 26 of 63
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Re: Does the "mix" really matter?????


@inverse wrote:

@Thomas_Thumb wrote:

Taxi818, Look forward to the post. Can you also please tell us your ratio of revolving accounts to total accounts

(note AMEX charge cards and store cards are typically lumped in with standard credit cards for this metric).

 

Inverse - Information I have seen indicates mix does look at ratio and that revolving accounts should optimally be 70% to 80% of the total mix. I suspect you are well below 50% on this ratio particularly if closed accounts are included in the calculation


The link I gave above with quotes from a FICO spokesman indicates that "charge cards" and "store cards" affect mix differently.  I may be the right one to test this since I only have 3 major bank cards and that's it.

 

I have also seen some references recommending that revolving accounts should be 3:1 against installment.  And 50% is about my ratio.  Didn't hold me back much if any as far as I can tell.


Inverse, I never expected 3 cards or a 50% ratio to hold back your score - just your ability to get the "Fico Exceptional Mix" badge of honor. If you want the badge, it looks like you may need to go on a card app spree. Smiley LOL

 

BTW - mix includes closed accounts. I thought you have at least 3 car loan and 2 mortgages on file - that's 5 loans minimum in the books. If so, revolving to total = 3/8 = 37.5%. Also, I think I might be missing a loan => 33% revolving/total.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 27 of 63
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Re: Does the "mix" really matter?????


@CreditGuyInDixie wrote:

@taxi818 wrote:
I said that because on either credit.com or another board it said I was not getting a single point in credit age. And I believe it. Yes. Oldest account is 2 years 1 month old. But average is only 1.2 years old. When you heard me mention this I was hoping to get points when I reached 2 years from oldest. But sadly my score did not change. Looks like the average is what counts.

I'd be curious to hear exactly what credit monitoring service made this claim (you think it may have been credit.com but it may have been another one too).  Also would be curious to hear exactly what language they used. 

 

It's extremely hard to get ZERO points from any FICO category.  Here's a way to think about it. 

 

The lowest FICO 8 score one can get is 300.  That's assuming you earned zero points in every category. 

 

The highest score is 850.

 

The difference is 550.

 

10% of 550 is 55.  That suggests that even in the smallest categories the range of points is (roughly) 0-55 (it may be possible to get a bit more than the theoretical max from any particular category, but let's be conservative and go with 0-55 right now).  With a 15% category the range is quite a bit higher (0-83).

 

To get 0 points from a possible 83, you'd need to be the worst one could imagine in that category.  Remember that even people who have terrible credit scores (e.g. 500) are still getting 200 or more points in the various categories.  "Age of oldest account" is a well documented factor from the "Length of credit history" category.  Your age of oldest is far better than many people.  And you believe that your AAoA is 1.2, which is certainly higher than some people.

 

You can be sure you are getting more than 0 points from this category.  Certainly you will get far more, however, when your AAoA and your AoOA are higher than they are now; that is certainly true.


Yes. it was credit .com. and the language was pretty clear. It said unfornuately you are not earning any points in this catagory. as your oldest account is too new. and your average age is too low. That is what it said. So i figured i was getting 0 points from this part of fico.Edit. also. the way it to the math on each catagory. if Credit Age is 15% of a fico score. i count that there is a total of 127 points available in that catagory. So if im getting 0. I would be happy just to get 3% of those points. any would be golden. Im not sure when the credit age actually kicks in. as stated. oldest is 2.1 years. Average is 1.2 years. just know way to find out if im getting points there or not.

Message 28 of 63
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Re: Does the "mix" really matter?????

Hi Taxi.  My comments in blue below.  You wrote:

 

Yes. it was credit .com. and the language was pretty clear. It said unfornuately you are not earning any points in this catagory. as your oldest account is too new. and your average age is too low. That is what it said. So i figured i was getting 0 points from this part of fico.

 

I am very surprised they said that.  It's almost certain to be canned languiage that the web site uses to mean "you are doing pretty badly in this category."  For the reasons I said before, it is really hard to get zero points in a category. 

 

Another thing to bear in mind is that credit.com doesn't offer FICO scores, so you certainly can't conclude that FICO is giving you zero.  The scoring model credit.com uses is VantageScore.  That in turn raises one interesting possibility.  Is your oldest account (the one that is 2+ years old) a closed account?  FICO counts closed and open accounts equally in terms of age, but it's possible that VantageScore doesn't.  I know that Credit Karma (which uses Vantage) ignores closed accounts for age.

 

Edit. also. the way it to the math on each catagory. if Credit Age is 15% of a fico score. i count that there is a total of 127 points available in that catagory. So if im getting 0. I would be happy just to get 3% of those points. any would be golden. Im not sure when the credit age actually kicks in. as stated. oldest is 2.1 years. Average is 1.2 years. just know way to find out if im getting points there or not.

 

It all depends on where your starting place is for each category.  I am assuming that FICO is giving you 300 points for free (scattered amongst the five categies according to their weight).  Thus even with the worst possible showing for the Age category, you still get 15% of 300 to start with (or 45).  Then the "real" points are given, which are as few as 0 or as much as 83.  45 + 83 = 128, basically the same number as what you came up with.  The point is that that there is a range of between 0 and 83 (roughly) in terms of the worst performer in the category vs. the best.

 

If you look at it in terms of the total 128, then yes you are certainly getting points.  Even a person who scores a 300 (virtually impossible) still gets 45 points for that category.

Message 29 of 63
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Re: Does the "mix" really matter?????


@CreditGuyInDixie wrote:

@hi Taxi.  My comments in blue below.  You wrote:

 

Yes. it was credit .com. and the language was pretty clear. It said unfornuately you are not earning any points in this catagory. as your oldest account is too new. and your average age is too low. That is what it said. So i figured i was getting 0 points from this part of fico.

 

I am very surprised they said that.  It's almost certain to be canned languiage that the web site uses to mean "you are doing pretty badly in this category."  For the reasons I said before, it is really hard to get zero points in a category. 

 

Another thing to bear in mind is that credit.com doesn't offer FICO scores, so you certainly can't conclude that FICO is giving you zero.  The scoring model credit.com uses is VantageScore.  That in turn raises one interesting possibility.  Is your oldest account (the one that is 2+ years old) a closed account?  FICO counts closed and open accounts equally in terms of age, but it's possible that VantageScore doesn't.  I know that Credit Karma (which uses Vantage) ignores closed accounts for age.

 

Edit. also. the way it to the math on each catagory. if Credit Age is 15% of a fico score. i count that there is a total of 127 points available in that catagory. So if im getting 0. I would be happy just to get 3% of those points. any would be golden. Im not sure when the credit age actually kicks in. as stated. oldest is 2.1 years. Average is 1.2 years. just know way to find out if im getting points there or not.

 

It all depends on where your starting place is for each category.  I am assuming that FICO is giving you 300 points for free (scattered amongst the five categies according to their weight).  Thus even with the worst possible showing for the Age category, you still get 15% of 300 to start with (or 45).  Then the "real" points are given, which are as few as 0 or as much as 83.  45 + 83 = 128, basically the same number as what you came up with.  The point is that that there is a range of between 0 and 83 (roughly) in terms of the worst performer in the category vs. the best.

 

If you look at it in terms of the total 128, then yes you are certainly getting points.  Even a person who scores a 300 (virtually impossible) still gets 45 points for that category.


Good point. My oldest is closed. it was oldest by only 3 weeks. My 2nd oldest is also open at the moment but they are only 3 weeks apart. It will be 2 years old on December 1st.

Message 30 of 63
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