What Is a Good Credit Mix?

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Last updated on April 3rd, 2024

There are a variety of factors that go into your credit score. One of those factors is known as “credit mix.” What is credit mix, however, and how can you get a good mix of credit?

What Does “Credit Mix” Mean?

Credit mix might not be a term you are familiar with, but it is an essential factor in what makes up your FICO credit score – along with payment history and credit utilization ratio. Credit mix refers to the different types of credit you hold that appear on your credit report, with the most common types of credit being either revolving or installment.

Credit cards are the most common form of revolving credit since they do not have a set balance. On the other hand, installment loans come with a fixed payment amount to repay, which is done over time. Common types of installment lines of credit include:

  • Student loans
  • Personal loans
  • Mortgages
  • Car loans

What Is a Good Credit Mix?

Part of having a good credit score is having a good credit mix. But what exactly constitutes a good mix of credit?

The easiest way to get a good credit mix is to have a mixture of installment and revolving credit accounts. Many Americans either have a mortgage, a student loan, an auto loan, or some combination of those three. Additionally, millions of Americans currently have open credit card accounts. If you fall into both categories, you likely have a good credit mix.

Why Does a Good Mix of Credit Matter?

Having a good credit mix shows lenders that:

  • You understand different types of credit, and
  • You can successfully manage different types of credit at the same time.

Lenders like to lend to borrowers who they know will pay their balances back and not default. Thus, doing so shows lenders that you can repay your debts. It also shows you understand how different types of credit work, which is a key component in how credit scores are calculated.

FICO score places 10% of its scoring weight on types of credit. VantageScore, the other prominent scoring model, places a value of 13% on the depth of credit, or credit mixture.

How To Get a Good Mix of Credit

Getting a good mix of credit requires having different types of credit accounts open. As noted, millions of Americans likely have some form of installment accounts open – usually either a car loan or student loans.

Those new to credit may not have any revolving credit, however, which can seriously affect your credit score. Without any revolving credit accounts, you may find it challenging to get new credit cards. While this may seem like a Catch-22, there is a way to solve the issue.

The easiest way to establish a good credit mix is by getting a good starter credit card. Starter cards are typically either student credit cards (designed for college students), unsecured subprime credit cards, or secured credit cards. These types of started credit cards feature lower credit score requirements for applicants, making them easier to receive.

Student Cards

Because student cards are designed with the college student in mind, they typically have lower requirements for credit score and credit history. Many college students have minimal experience with credit cards – or credit in general. Because of this, they lack a good mix of credit types. Student cards help them address this issue.

Subprime Unsecured Credit Cards

Subprime credit cards are another option for establishing the right credit mix. Subprime (or even deep subprime) credit cards feature smaller credit limits, but they offer an easier route into revolving credit. These cards – such as those offered by banks like Credit One – provide a regular credit card’s full features, including regular reporting to the three major credit bureaus (Equifax, Experian, and TransUnion). And, unlike secured credit cards, they don’t require a security deposit.

Related Article: What Are the Easiest Credit Cards for Bad Credit to Get?

Secured Cards

Secured credit cards are similar to unsecured subprime credit cards: they offer the full features you expect from a credit card, activity is reported to the credit agencies, and more. Secured cards, however, differ in that they require a security deposit to open and maintain an account.

These security deposit requirements are what give the cards their name. These deposits are refundable, meaning if you make your payments on time and in full, you’ll get the deposit back when you close the account.

The deposit requirement also offers cardholders better interest rates in many instances versus what a subprime, unsecured credit card can offer. The Applied Bank Secured Visa Gold Preferred, for example, features a low, fixed APR on purchases – more than half lower than the typical rate from a similar unsecured card.

 Related Article: What Are the Best Secured Cards for Rebuilding Credit?

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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