If you have at least one credit card and a car payment and/or student loan in your name, you may be surprised to learn that you already have a good credit mix.
The two most common types of credit accounts arerevolving and installment credit. Both can have an impact your credit score, however their borrowing and payment structures differ.
Your credit card account, which you charge and make varying payments on each month, counts as revolving credit. Your balance is forever changing and there is no particular end date to having this type of credit (unless, of course, you close your credit card account).
Your car payment or student loan, for which you make the same, fixed payment on each month, counts as installment credit. With this type of credit, you have a set balance divided out equally into a series of payments due each month until the specified end date.
Having both revolving and installment credit makes for a perfect duo because the two demonstrate your ability to manage different types of debt. And experts would agree: According to Experian, one of the three main credit bureaus, "an ideal credit mix includes a blend of revolving and installment credit."
How to get a good credit mix
If you are aiming to achieve a good credit mix, first know what counts as installment credit: student loans, auto loans, mortgages and personal loans. Since there's a good chance you already have an installment account in your name, now you just need to focus on paying it off within the window of time specified. Do this by making sure your set monthly payments are made in full and on time when due.
For those who are new to credit cards, consider opening oneto have some form of revolving credit and use it wisely — only charge what you know you can pay off in full by the due date. This way, you never have to pay interest on a revolving balance.
Credit card beginners should start with cards that are geared toward building credit. For example, theCapital One Platinum Secured Credit Card has no annual fee and varying minimum security deposits starting at $49, $99 or $200 — based on your creditworthiness.
Most secured credit cards require a deposit upfront that is equal to your credit limit (usually $200), but qualifying cardholders of the Capital One Secured can still access a $200 credit limit while only depositing a minimum deposit as low as $49 or $99. In addition to lower security deposits, Capital One gives cardholders access to a higher credit limit after making their first five monthly payments on time.
Capital One Platinum Secured Credit Card
Rewards
None
Welcome bonus
No current offer
Annual fee
$0
Intro APR
N/A for purchases and balance transfers
Regular APR
29.99% variable
Balance transfer fee
$0at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
Credit needed
No credit history
Terms apply.
Read our Capital One Platinum Secured Credit Card review.
Pros
- No annual fee
- $49, $99 or $200 refundable deposit
- No fee charged on purchases made outside the U.S.
- Flexibility to change your payment due date
Cons
- High variable APR
- No rewards program
For those looking to open a revolving credit account and have only a fair credit score, consider theCapital One Platinum Credit Card. This card is open to applicants with less-than-stellar credit ( Fair/Good) and comes with no annual fee nor foreign transaction fees for those traveling outside the U.S.
Capital One Platinum Credit Card
Pros
- No annual fee
- No fee charged on purchases made outside the U.S.
- Automatically considered for a higher credit line in as little as 6 months
Cons
- High variable APR
- No rewards program
Learn more:The best credit cards for building credit of September 2020
Bottom line
Making timely payments on all your credit accounts, no matter if it's installment or revolving, is important if you want to be rewarded for having a mix of both. Having both revolving and installment accounts in your name gives you a good variety, shows you can handle multiple loan types and also boosts your credit score. It may not be the biggest factor, but your credit mix counts for 10% ofyour FICO credit score.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
The fastest way to get a credit score boost is to lower the amount of revolving debt (which is generally credit cards) you're carrying. The percentage of credit you use against the amount of credit you have available is called your credit utilization rate.
What's considered a good credit mix? ›
What Is a Good Credit Mix? There's no such thing as an ideal credit mix for an excellent credit score, but at a minimum, you'll want to have at least one type of revolving credit and one type of installment credit. Credit mix is a factor that tends to naturally evolve as you make financial moves throughout your life.
What is the trick to increasing your credit score? ›
There are several ways you can improve your credit score, including making on-time payments, paying down balances, avoiding unnecessary debt and more.
How to get a 720 credit score in 6 months? ›
Top ways to raise your credit score
You can do several things in the short term to try to better your credit score. Improving your credit utilization will likely have the quickest impact. You can accomplish this by paying down debt, upping your credit limit or opening a new credit account.
What is #1 factor in improving your credit score? ›
1. Payment History: 35% Making debt payments on time every month benefits your credit scores more than any other single factor—and just one payment made 30 days late can do significant harm to your scores. An account sent to collections, a foreclosure or a bankruptcy can have even deeper, longer-lasting consequences.
How to get 800 credit score in 45 days? ›
Here are 10 ways to increase your credit score by 100 points - most often this can be done within 45 days.
- Check your credit report. ...
- Pay your bills on time. ...
- Pay off any collections. ...
- Get caught up on past-due bills. ...
- Keep balances low on your credit cards. ...
- Pay off debt rather than continually transferring it.
Pay on time.
One of the best things you can do to improve your credit score is to pay your debts on time and in full whenever possible. Payment history makes up a significant chunk of your credit score, so it's important to avoid late payments.
What can raise your credit score? ›
If you want to improve your score, there are some things you can do, including:
- Paying your loans on time.
- Not getting too close to your credit limit.
- Having a long credit history.
- Making sure your credit report doesn't have errors.
Consider Opening Different Types of Credit Accounts. Opening different types of credit accounts can help improve your credit mix and boost your credit score. Lenders like to see a mix of revolving credit (credit cards) and installment credit (loans or mortgages) to show you can manage different debts responsibly.
What habit lowers your credit score? ›
Late or missed payments can cause your credit score to decline. The impact can vary depending on your credit score — the higher your score, the more likely you are to see a steep drop.
If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt. Plus, using more than 30% of your credit line is likely to have a negative effect on your credit scores.
How to boost credit score overnight? ›
5 Ways to Boost Your Credit Score Overnight
- Review Your Credit Reports and Dispute Errors.
- Pay Bills On Time.
- Report Positive Payment History Like Utilities to Credit Bureaus.
- Keep Old Accounts Open.
- Keep Your Credit Balances Under 30%
If you take out a loan to consolidate debt, you could see a temporary drop because of the hard inquiry for the new loan. Your credit score can take 30 to 60 days to improve after paying off revolving debt. Your score could also drop because of changes to your credit mix and the age of accounts you leave open.
How to fix credit fast? ›
If you want to improve your credit quickly, the following strategies could help:
- Use a reputable credit repair service.
- Prioritize and pay outstanding debt.
- Explore secured credit cards.
- Become an authorized user.
- Develop a budget and stick to it.
A 650 credit score is generally considered “fair.” A score in this range may limit you from certain financial opportunities. Payment history, monitoring your credit and lowering your credit utilization ratio can be helpful ways to improve this score over time.
How to raise credit score 100 points in 30 days? ›
Improving your credit in 30 days is possible. Ways to do so include paying off credit card debt, becoming an authorized user, paying your bills on time and disputing inaccurate credit report information.
How can I shoot my credit score up fast? ›
Paying your bills on time Is one of the most important steps in improving your credit score. Pay down your credit card balances to keep your overall credit use low. You can also phone your credit card company and ask for a credit increase, and this shouldn't take more than an hour.
How long does it take to build credit from 0 to 700? ›
If you have no credit history, it could take 6 months to a year to reach a decent credit score around 700 with FICO® or VantageScore® models. To attain an excellent score of 800 or higher, expect several years of consistent and responsible credit behavior.
How to get a credit score of 700 fast? ›
How to Get a 700 Credit Score
- Pay on Time, Every Time. Your payment history is the most important factor in determining your credit score. ...
- Pay Down Credit Card Balances. ...
- Avoid Unnecessary Debt. ...
- Dispute Inaccurate Credit Report Information. ...
- Avoid Closing Old Credit Cards.
