Type of Credit You Use
About 10% of your score is based on the type of credit you use.
According to the information provided by the Fair & Isaac, the creator of the FICO credit score, about 10% of your credit score is based on:
- What kinds of credit accounts you have
- How many of each kind of credit
Determining the Type of Credit You Use
Your score is a complex formula that takes into account the types of credit accounts, their mix, and the total number of accounts you have under your name.
Credit account types include:
- Credit cards
- Retail accounts
- Installment loans
- Finance company accounts
- Mortgage loans
In general, the effect of how many accounts you have and their mix would vary with your income and other factors. It is not recommended that you open new accounts just to diversify your credit profile. This part of your credit score is more important if you do not have a lot of other credit information in your credit history or if you are just beginning to establish your credit.
