Understanding Your Credit Mix

A healthy credit mix includes revolving and installment loans. Revolving credit are credit cards and retail cards while installment loans are mortgages, car loans, student loans, etc. However, this doesn’t mean you should go out and start acquiring new debt as this category only makes up 10% of your FICO score and it’s a hard inquiry which will impact your score negatively.

But, if this is something you are looking to improve, here are some suggestions:

Installment Loans

• Personal loans can be obtained by your bank.
• A car loan is also a good choice.

Revolving Credit

• Unsecured credit cards can be obtained by any bank. Nerdwallet offers a comparison of the best credit cards depending on your needs.

• Retail credit cards have easier approval but much higher interest rates. This is only a good option if you will only charge what you can afford

• Secured credit card – start as low as $200. Most credit cards have this option.

• If personal loans are not an option, Self Inc. claims they can raise your score 32 points. Before jumping in, consider that you would be paying a sign up fee and monthly interest, but they report timely, monthly payments to all credit bureaus and, at the end of your term, you have access to your savings.

Payday loans and title loans do not count towards your credit mix as these lenders do not report to the credit bureaus. However, if you default, these lenders will sell to collections agencies and they do report.

Mindful Reminder

Take time to observe your thoughts and emotions. What are they saying? Doing this check in and being realistic with yourself is important here. Yes, having a good credit score has a lot of benefits, but it’s equally important to know if you are capable of being responsible with new debt. Remember it’s only 10% of your FICO score and prompt, monthly payments are 35% while credit utilization is 30%. Be wise and honest with yourself.

Seeking Help

If you are depressed, anxious, or have panic attacks, find a health professional who can help you. 

SAMHSA National can provide free referrals. They are open 24/7, 365 days a year.

Call: (800) 662-Help (4357).  

Visit:  SAMHSA’s National online treatment locator

Text: Your zip code to 435748

If you are experiencing suicidal thoughts, please contact 988 for help. The calls are free, confidential, and they are open 24/7 to help you navigate difficult emotions.

Attend a Workshop

If you are interested in attending an live webinar on improving your relationship with your finances, please visit my events.

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