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How do Credit Cards vs Retail Cards Affect Credit Mix?

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James3
Contributor

How do Credit Cards vs Retail Cards Affect Credit Mix?

I'm trying to understand the "credit mix" part of Fico scoring. I have 5 credit cards (all Visa or Mastercard) and two student loans that I expect to pay off this year. I have a third student loan account I paid off last year. What will be the effect on my credit score once the student loans are paid in full? 

I'm not planning to need an auto loan, mortgage, or personal loan in the next year. Is a retail card (the kind without a Visa or MC symbol) a different type of credit that will add to my credit mix?

My scores are all 820+ and I would like them to stay above 800.

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Message 1 of 9
8 REPLIES 8
HeavenOhio
Senior Contributor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?

Retail cards don't improve your credit mix. They're unreliable AZEO cards, but I don't see anything else that differentiates them from major cards as far as FICO is concerned.

Message 2 of 9
SouthJamaica
Mega Contributor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?


@James3 wrote:

I'm trying to understand the "credit mix" part of Fico scoring. I have 5 credit cards (all Visa or Mastercard) and two student loans that I expect to pay off this year. I have a third student loan account I paid off last year. What will be the effect on my credit score once the student loans are paid in full? 

I'm not planning to need an auto loan, mortgage, or personal loan in the next year. Is a retail card (the kind without a Visa or MC symbol) a different type of credit that will add to my credit mix?

My scores are all 820+ and I would like them to stay above 800.


If I were you I wouldn't worry about it.

 

Paying off your student loans does not affect your credit mix. Closed loans count towards "credit mix".

 

I don't believe retail cards add to your credit mix, but even if they do I wouldn't get one; they count as a slight negative in the insurance industry scores, which could affect your car insurance premium.

 

When you pay your student loans down to zero you could lose some points in the FICO 8's and 9's, due to the 'no open loan' penalty.  But again I wouldn't sweat it. Your high scores give you a comfortable buffer.  If you want to be compulsive about it, though, you could, when the time comes, offset the loss by getting a share secured loan from NFCU or PenFed and immediately paying it down to 9% of the original loan amount.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 3 of 9
AndySoCal
Valued Contributor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?

@James3 

In your case mastercard visa, discover and store cards are revolving credit cards. The student loans is a type of  an installment  loan. So your credit mix you have two types of credit.  If you had an AMEX or any other card where the balance was due in full every month. This would be a charge card  with an account type of open.  Open simply means it is due every thirty days. Not if the acount is open or closed.

FICO Scores XPN v8 802 V2 831 (SDFCU) TUC 803 v8 EFX 807 (10/2023)
Discover 09/90 19,000, JCPenney 10/2008 4,700 US Bank Cash+ 12,000 Citibank Custom Cash 5/2015 11,100 C State Dept. FCU 15,000 06/2023 , 02/2024 Redstone FCU Signature VISA 10,000 Banking: Ally Bank Credit Unions: Lafayette FCU Quorum FCU State Department FCU State Department FCU Pelican State CU Redstone FCU

Message 4 of 9
James3
Contributor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?

Ok, thanks for the information. This is all good to know. I don't think I'll get a personal loan just to immediately pay off 91% of it, but I can always make that choice in the future.  

I didn't realize that retail cards had a negative connotation in the eyes of the insurance industry either. Definitely useful info.

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Message 5 of 9
donkort
Valued Contributor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?

I don't believe "retail cards" are conducive to optimal "credit mix."  I believe FICO thinks of them as a somewhat "lesser" version of a credit card which could be used outside of particular retail stores.  The FICO score requirements usually are less stringent within "retail cards."

 

What does affect FICO score negatively is the presence of a loan from such entities as "Household Finance."  I believe these are called "retail loans."  I used to take loans from "Household Finance" back in the 80s and 90s.  "Retail loans" are cited as something which negatively affects FICO score.

FICO 8: EQ 810; TU 816; EX 822 as of 7/5/2022
Message 6 of 9
SouthJamaica
Mega Contributor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?

I have never seen a good explanation of the components of credit mix.

 

Clearly having a regular credit card and an installment loan are part of it. If you have both of those you're 2/3 there.

 

But what satisfies the 3rd component is a mystery to me: it's got to be some other form of revolving credit, but which kind? Retail card? Charge card? Personal line of credit?

 

In my case, even while other parts of my credit profile have been imperfect, my credit mix has been perfect for quite a while. I doubt the 3rd component was satisfied by a retail card, because I only had one for a few weeks. I doubt it was satisfied by my Amex Gold charge card, because my credit mix was perfect before I ever got that card. So I'm left to think that the missing link for me, which elevated me to perfect credit mix, was the personal line of credit -- I've had 7.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 7 of 9
Anonymous
Not applicable

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?

IIRC, the third is real estate.

 

On a related note:

I am literally getting letters of adverse action with "No real estate" as the only factor listed for the decline.

Message 8 of 9
pizzadude
Credit Mentor

Re: How do Credit Cards vs Retail Cards Affect Credit Mix?


@Anonymous wrote:

IIRC, the third is real estate.

 

On a related note:

I am literally getting letters of adverse action with "No real estate" as the only factor listed for the decline.


Just to clarify, this is a creditor specific decline reason, not a FICO scoring reason.   There is no FICO scoring element specific to Real Estate.   Installment loans, yes. 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 9 of 9
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