Credit Scoring Factor --"Types of Accounts" or Credit Diversity

Credit diversity or “types of accounts,” in credit report speak, is a minor factor that determines about 10% of your credit score in most scoring models.
It measures how you have handled different types of credit accounts, currently and over time. Since it is measured by the scoring models, it also can be managed or influenced by you. Like most things related to credit scores, it is best accomplished over time and with a strategy.

There are three types of accounts credit scoring algorithms consider:

• Revolving minimum payment required monthly
  • Credit Cards
    • Secured
    • Unsecured
  • HELOC (Home Equity Line of Credit)
• Open orService Credit must be paid in full every month
  • like the old school AMEX cards
  • May only report under expanded scoring models such as UltraFICO
    • Utilities
    • Cell phones
    • Cable/Satellite
• Installment fixed term of payments until payoff
  • Student Loans
  • Auto Loans
  • Mortgages
  • Appliances, electronics, furniture
  • Credit Builder Loans

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What Is NOT Part of Credit Mix?

• Three of the most common types of financial services products that don't count toward credit mix are rent-to-own (RTO), payday loans, and title loans. Lenders who provide RTO, payday and title loans don't report them to credit bureaus, so they won't impact your credit scores or show up on your credit report. Even when you repay on time every month, it won't factor into your credit report.

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• HOWEVER, if you default, your account will be sold to a collection agency, which will then report it on your credit. In other words, RTO, payday, and title loans can't help your credit, but they can absolutely hurt it.

​​Best practices to optimize credit diversity

• Become an authorized user.
• Make someone an authorized user. 
• As you “live long and prosper,” mindfully maintain a diverse credit mix as you engage the economy over time.
• BK recovery strategy

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