The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
Most people worry about having too much credit: too many accounts, for example, or too much debt. But rarely do they worry about whether they have enough credit. Sometimes they should.
One of the five main factors in most credit scores is “account mix,” which looks at the different types of accounts listed on a consumer’s credit reports, including revolving accounts (like credit cards) and installment accounts (such as mortgages or student loans). Generally, having a variety of different types of credit accounts can contribute to a higher score.
How you handle the credit you have is the most important factor in your credit score, of course. Payment history and debt usage account for around 60% or more of your score. Although the mix of accounts listed is a less significant factor (often around 10% of the score), the points you earn for this factor could be enough to push you into a higher credit score range — or not. Sometimes every point counts.
For example, Margaret (see graphic) checks her credit score and learns she is earning a C- for her account mix. Why? She has two revolving accounts but no mortgage, auto or student loans. In other words, she has no installment accounts. While it is possible for her overall score to be high, if it’s not, she may want to consider another type of account.
Before you try to fiddle with anything on your credit reports, make sure you fully understand what will help — and what won’t. That means getting your free annual credit reports to make sure they are accurate, and getting a free credit score that explains the factors that affect your score. If this analysis reveals that your account mix is a problem, consider taking steps to improve it. For example, you can:
You can find out which factors are affecting your credit scores, check two of them monthly and get an action plan for your credit for free at Credit.com.
Image: iStock
June 14, 2023
Credit 101
January 25, 2022
Credit 101
February 19, 2021
Credit 101