As a consumer, staying on top of your credit score is imperative. Between regularly checking your credit score and understanding how to read your report, doing what you can to ensure that your score is accurate is imperative. One area you may have questions surrounding is your credit mix. If you’re unsure what this means, you’ll want to keep reading. The following blog explores how a credit mix is determined, if you can improve it, and why working with an experienced San Diego County credit reporting error lawyer is in your best interest during these difficult times.
What Is a Credit Mix?
Your credit mix is one of the factors that influences your credit score. This describes the different types of credit you have at any given point. Generally, the more diverse your credit lines are, the better this aspect of your credit will be.
There are two main forms of credit that will impact your score, and having both can help ensure that your credit mix positively influences your score. Generally, the first kind of credit is revolving. This means you have a credit limit that places the maximum amount you can spend. As you borrow money, you’ll pay it off to free up your credit limit. Common examples include credit cards, personal credit lines, and retail cards.
The other kind is installment credit. This means you have a lump-sum amount that is paid off in installments. Auto loans, mortgages, and student loans are all considered installment credit.
What Can I Do to Improve the Mix?
It’s important to understand that opening new accounts solely to improve your credit mix is not recommended. This is because your credit mix only makes up a small portion of your credit score, which is unlikely to decide if you are approved for a loan. As such, your credit score will improve naturally over time. For example, you may open a credit card when you turn 18, before eventually taking out a car loan, and applying for a mortgage later. All these factors can help improve your credit mix score as your needs change.
If you want to improve your credit mix, understanding the factors that influence the score is critical. Generally, the first thing you’ll want to avoid is applying for too many credit lines in a short period. This can negatively impact your credit score, meaning you are more likely to be denied. Instead of forcing too many new lines of diverse credit to improve your score, you may want to become an authorized user of the lines of credit of financially responsible loved ones. However, you should ensure that the individual you become an authorized user of is financially responsible.
Understanding the factors that impact your credit score is critical as a consumer. As such, if you see something on your credit score that doesn’t seem correct, connecting with an experienced consumer attorney is vital. Whether you have reason to believe you are a victim of identity theft or the credit reporting bureau made an error, it’s imperative to take action. At Barthel Legal, we understand how complicated these matters can be, which is why our firm is dedicated to assisting you during these difficult times. When you need help, contact us today to learn how we can fight for you.
