Part 5: Your Credit Mix – Diversifying for a Stronger Credit Score

Author:  Jim Thornton, CLU   |   Articles, General

Your credit mix, comprising different types of credit accounts, is a crucial factor influencing your
credit score. This final article in our credit series will guide you through understanding and
optimizing your credit mix for a healthier financial profile.

What is a Credit Mix?

A credit mix refers to the variety of credit accounts you hold, such as credit cards, mortgages,
car loans, and student loans. It accounts for about 10% of your credit score, reflecting your
ability to manage diverse credit types effectively.

Types of Credit Accounts

  1. Revolving Credit: This includes credit cards and lines of credit where you can borrow up
    to a limit and pay back over time.
  2. Installment Loans: These are loans with fixed payments over a set period, such as
    mortgages, car loans, and personal loans.

Benefits of a Diverse Credit Mix

A well-managed credit mix demonstrates your ability to handle different credit types
responsibly. It shows lenders that you can juggle various financial obligations, enhancing your
overall credit profile and boosting your credit score.

Managing Different Types of Credit

  1. Timely Payments: Ensure all credit accounts are paid on time to avoid negative impacts
    on your credit score.
  2. Balanced Credit Use: Maintain a healthy balance between revolving credit and
    installment loans.

Common Mistakes to Avoid

  1. Overextending Credit: Avoid taking on more credit than you can manage. If a credit card
    is nearing its limit, never go over it. Even a slight overage can severely impact your
    score. Remember, interest charges are added before payments are applied, which can
    push you over your limit if you're not careful.
  2. Closing Older Accounts: Keep older accounts open to maintain a longer credit history,
    which benefits your score. Older accounts also help with your credit utilization ratio. For
    more on credit utilization, refer to our previous article regarding an in-depth look at
    credit utilization.

Practical Steps to Improve Credit Mix

  1. Gradual Addition: Introduce new credit types slowly and responsibly.
  2. Regular Monitoring: Check your credit reports regularly to ensure accuracy and to track
    your progress in diversifying your credit mix.


Having a varied credit portfolio can positively influence your credit score. By managing different
types of credit accounts wisely and avoiding common pitfalls, you can build a robust and
balanced credit profile. This final article completes our series on understanding and optimizing
credit scores, empowering you to achieve financial success.
By covering these points, this article will provide readers with practical advice on how to
improve their credit mix, rounding out the comprehensive overview of credit management.

Jim Thornton, CLU

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About the Author

Jim Thornton is a Financial Planner with Assante Capital Management Ltd. Please contact him at (519) 752-3155 to discuss your particular circumstances prior to acting on the information above.

Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

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