Mixture of Credit – 10% of Your Credit Score – Episode #84

Mixture of credit is important to your credit score, but at certain times it matters more than other times. It represents just 10% of the FICO credit score, so in the aggregate you should not pay a lot of attention to this factor. But, that’s in the aggregate. For those of you who are credit building, this is an important piece of the credit score factors pie. You want to make sure you have revolving accounts [credit cards] and installment accounts [auto loans, car loans, personal loans]. Most people think that having just credit cards might be enough to build out your file. It’s not as credit score worthy as having an installment loan to go with it. The best scores are people with paid off installment loans and paid in full credit cards in their credit files.

Mixture of Credit

Can adding to the mix hurt you? Sure, I added an expensive [note: i live in San Francisco] mortgage to my credit file, and while the mixture might have helped, it was countered by the high amount of debt I’m now carrying. So, my score went down. I suspect my score will reach it’s all time high, if and when, I claim that mortgage as paid in full.

Of all the credit score factors, this ranks lower than most, but considering we are moving into a time when every point in the score can make a difference, it’s worth looking into.