The old saying that you shouldn’t put “all of your eggs in one basket” is a saying that has lasted
quite a while for good reason. Part of being financially healthy is having balance. If you’re
looking to manage your money in the best way possible, having an even-handed approach is
crucial.
For instance, if you have a financial portfolio, it’s better to have a diversified mix of investments.
Unfortunately, what many people overlook is the idea of mixing up their credit. The mix of credit,
according to FICO, is 10%. The main question:
What is a mix of credit?
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Why Having a Mix Of Credit Is Important
To understand the term “credit mix,” you must first understand that there are two types of credit:
installment and revolving.
Installment credit comes with a fixed end date. With installment credit, you make “installment”
payments each month. Some good examples of installment loans include student loans,
mortgages, auto loans, and personal loans.
On the other hand, we have revolving credit, which is credit without a particular balance or end
date. Rather than having the balance spread out over the course of a specific time, you’ll simply
have a minimum payment that you have to pay before the end of every month.
You might choose to pay more than the minimum on your revolving credit balance, though it
isn’t absolutely necessary. One of the most common types of revolving credit is a credit card.
Another type that many people have is a home equity line of credit or HELOC.
When it comes to credit cards, there are two types: retail cards and bank cards. Retail cards
typically have much higher interest rates and a ton of stipulations in the fine print. It is very
important that you make sure to read the fine print on your preferred retail card before applying.
Bank cards, on the other hand, are pretty typical. They are issued by a bank.
It is a best practice to have both revolving lines of credit and installment lines of credit on your
account. One of the best ways to get revolving credit is to open up a credit card account. Of
course, if you choose to open up a credit card account, make sure that you can pay your bill off
on time each month so that you don’t have to deal with interest.
As for an installment loan, you might consider getting a personal loan of some sort just to show
the bureaus that you have the ability to balance out your credit.
While having a good mix of credit is a great way to boost your score, it isn’t the only way by far.
If you’re looking to potentially boost your score, we recommend tradelines.
Here at Personal Tradelines, we’re all about making sure our customers are confident
throughout the tradeline buying process. We’re here to provide all of the necessary knowledge
so that you can find the tradeline that fits your situation best.
Make sure to get in contact with us when you are ready to take the first step towards great
credit!
