Having a good credit score is paramount to your financial health. Not only does it increase your chances of availing a loan, but it also helps in acquiring favourable rates and terms. Maintaining the right range of credit ratings is always advisable; and in case of a credit fall, individuals need to work on enhancing their credit scores before they can apply for future credits. Therefore, it is important to understand the multiple factors that go into calculating your credit score, one of which is the credit mix.
Credit is one of the determinants of your credit score. A sound credit mix denotes a strong financial profile and can impact your score significantly. Let’s see how.
Understanding Your Credit Score
CIBIL scores, commonly known as credit scores, are three-digit numerals ranging between 300 to 900. They provide a snapshot of your credit history and portray your credit behaviour. Scores closer to 300 are considered unfavourable for availing credit because they reflect unreliable credit habits. On the other hand, 900 is the highest credit score reflecting responsible credit behaviour. Such individuals find it easier to obtain credit at attractive interest rates and conditions. Lenders typically extend favourable loan terms to applicants with CIBIL scores of 750 or above.
These scores are provided by credit bureaus in India such as TransUnion CIBIL, Experian, CRIF High Mark and Equifax. They receive financial data pertaining to every individual who has ever availed of credit from different banks and financial institutions around the country. Credit bureaus store these records and access them when necessary to create a detailed credit report. Then, they assign it a credit score or CIBIL score which serves as a numeric credit summary.
What is Credit Mix?
A diverse mix of credit benefits your CIBIL score. Credit mix refers to the credit accounts - the number of secured and unsecured loans - you currently hold. Secured loans are obtained by pledging high-value collateral like real estate, gold, fixed deposits, investments, or other securities. Prime examples are Home Loans and Loans Against Property. Unsecured loans, on the other hand, do not require collateral, which is why, they come with more credit risks and higher interest rates such as a personal loan, business loan, or education loan.
Parameters Used to Calculate Credit Score
Credit bureaus will calculate your credit score based on the following parameters:
- Payment history (35%) – This determines how consistently one pays their outstanding dues. Your payment history forms a sizeable part of your credit score. If you have always been regular in bill payments, you have nothing to worry about.
- Credit utilisation (30%) – Credit usage in relation to the given limit is your credit utilisation ratio. Try to curtail spending up to 30%; anything beyond that may harm your score.
- Credit history period (15%) – This refers to the duration of your old accounts. Your score receives a boost if you have active accounts that show timely payments spanning longer years.
- New credit (10%) – Availing a number of credit or loans within a short time frame can decrease your credit score as it denotes over-reliance on credit. Hence, avail of loans only when necessary.
- Credit mix (10%) – Credit mix refers to the different types of credit accounts you have open and how well you manage them thereby impacting your credit ratings.
What are the Two Types of Credit Accounts?
Credit accounts fall under two categories. These are:
- Instalment loans – In instalment loans, you borrow a specific amount and repay it through a series of smaller payments for a stipulated period of time. Examples include mortgages, personal loans, and so on.
- Revolving credit – Here you don’t borrow funds. In revolving credit, one uses credit in line with the limit accorded to them and pays it back each month, either as the minimum amount due or the full balance. Credit cards and home equity lines of credit are the main examples.
What is a Healthy Credit Mix?
A healthy credit mix comprises both instalment and revolving accounts, signalling a proper understanding of credit and its optimum utilisation. It can elevate your credit score and your financial portfolio. Diversity in credit is always recommended but that doesn’t imply you need to dip into each credit type. You could consider one instalment account and a couple of revolving accounts to get a good mix. For example, you could go in for one education loan, one auto loan, and two credit cards.
If you have only four credit cards and no existing loans, it might have a negative impact on your credit score. In such a situation, do not take a loan just to improve your credit score. If you have been making regular payments and managing your credit card usage well, you can maintain a good credit score even without having a variety of different types of credit.
However, if that's not the case and you find yourself carrying a balance on your credit cards from one month to the next, applying for a personal loan to help manage your debt might be a good option. Personal loan interest rates are likely to be lower than the charges on your credit card. You can also use some of the loaned funds to cover expenses that you would typically put on your credit card.
Read Also: What is Credit Mix and How to Boost Your Credit Score?
Should I Worry About My Credit Mix?
A good credit mix can protect you from a sudden fall in CIBIL scores usually brought about by account closures. It must be noted that despite regular payments and the ideal number of credit lines, having just one type of credit, whether revolving or instalment, can hurt your credit mix. So, one loan and one credit card may display diversity but it might not hold true to expectations if you want to enhance your credit score.
Nevertheless, all things considered, it may be difficult to possess the right mix of credit accounts. Thus, if you have a high credit score, take it easy and focus on these basic aspects instead:
- Pay the bills or dues on time
- Avoid running high on your credit card tab
- Maintain long-term accounts
- Avoid applying for too many credit accounts at once
Summing Up
Your credit score is an indicator of financial wellness; and a healthy credit mix is one of the factors, which helps in adding up the score. Hence, whether you have already availed of credit or intend to take one up, keep track of your credit report and learn how to read it right. There may be variations in the types of credit scores depending on which credit bureau generates it. Maintaining a low credit score utilisation and paying bills on time, among other best practices, always works in your favour as it qualifies you to receive the best credit deals in the market.
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
Trending Articles

home+loan Home Loan
[N][T][T][N][T]
Why Notary Fees Vary: Key Factors Explained2025-01-31 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Pre-EMI or Full EMI: Understanding Home Loan Repayment Options2025-01-16 |

home+loan Home Loan
[N][T][T][N][T]
Stamp Duty in Bihar: Key Documents and Fees Simplified2025-01-16 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Khasra Number Explained: How to Find It2025-01-03 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Completion Certificate: Why It Matters for Property Buyers2025-01-17 | 2 min

home+loan Home Loan
[N][T][T][N][T]
What is LOD in Home Loans? Meaning, Importance, and Benefits2025-01-10 | 2 min

home+loan Home Loan
[N][T][T][N][T]
What is MODT in Home Loans & Importance2025-01-27 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Understanding APF Number and Its Role in Home Loan Applications2025-01-07 | 2 min

home+loan Home Loan
[N][T][T][N][T]
What is a Non-Encumbrance Certificate (NEC): Its Meaning and Importance2025-01-27 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Understanding Bigha in India: Convert 1 Bigha to Square Feet, Acres, and Hectares2025-01-31 | 2 min

home+loan Home Loan
[N][T][T][N][T]
A Guide to Applying for DTCP Approval for Patta Land Online2025-01-13 | 6 min

home+loan Home Loan
[N][T][T][N][T]
Cooperative Housing Societies: Objectives, Types, and Advantages2025-01-13 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Eligibility Guide for PMAY Urban 2.0: Credit Linked Subsidy Scheme (CLSS) Explained2025-01-13 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Gift Deeds: A Comprehensive Guide to Registration and Documentation2025-01-29 | 2 min

home+loan Home Loan
[N][T][T][N][T]
How to Convert Hectare to Bigha?2025-01-29 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Key Comparison Between PMAY Gramin and PMAY Urban 2.02025-01-20 | 4 min

home+loan Home Loan
[N][T][T][N][T]
PMAY Urban 2.0: Guidelines for Affordable Housing in India2025-01-29 | 2 min

home+loan Home Loan
[N][T][T][N][T]
PMAY Urban Mobile Application: Everything You Need to Know2025-01-20 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Transferable Development Rights (TDR): Understanding the Concept2025-02-12 | 2 min

home+loan Home Loan
[N][T][T][N][T]
PMAY Urban 2.0: Interest Subsidy Scheme for Affordable Housing2025-02-12 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Can I Take a Home Loan and a Personal Loan Together?2024-01-17 | 4 min

home+loan Home Loan
[N][T][T]Stamp[S]Paper:[S]Use[S]and[S]Validity[N][T]
Stamp Paper: Use and Validity2025-01-30 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Inches to Centimetre Conversion: Key Insights for Home Construction2025-01-22 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Home Loans and CIBIL Scores: The Key to Approval2025-01-03 | 2 min

home+loan Home Loan
[N][T][T][N][T]
DLC Rate in Home Loans: Everything You Should Know2025-01-17 | 2 min

home+loan Home Loan
[N][T][T][N][T]
How to Check Your Bajaj Housing Finance Home Loan Status2023-12-13 | 4 Min

[N][T][T][N][T]
Everything You Need to Know About Home Loan Part-Prepayment2024-12-18 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
A Guide to Calculate Loan Against Property EMI2025-01-08 | 2 min

[N][T][T][N][T]
Loan Against a Shop- Commercial Property Loans2024-12-18 | 2 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Types of Collateral Properties2024-12-26 | 4 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Transform Your Space with a Loan Against Property for Home Renovation2024-12-26 | 2 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Things You Need to Know Before Applying for a Loan Against Property2024-12-02 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Features and Benefits of Home Loans: A Complete Guide2024-12-27 | 3 min

cibil Cibil
[N][T][T][N][T]
Loan Rejection Impact on CIBIL Score2024-12-23 | 3 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding All the Charges on Your Loan Against Property2024-12-27 | 2 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Choose the Right Lender for a Loan Against Property2024-12-23 | 3 min

[N][T][T][N][T]
Top 3 Reasons to Buy a Home Before You Reach 302024-12-11 | 3 min

home+loan Home Loan
[N][T][T][N][T]
How to Connect with Bajaj Housing Customer Care2023-06-27 | 5 Min

loan+against+property Loan Against Property
[N][T][T][N][T]
How Can a Loan Against Property Help You Expand Your Business?2024-12-02 | 5 min

home+loan Home Loan
[N][T][T][N][T]
3 Smart Tips for Refinancing Your Home Loan2024-12-03 | 3 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Benefits of Loan Against Property EMI Calculator2024-12-03 | 3 min

[N][T][T][N][T]
How to Choose the Right Home Loan2024-11-26 | 4 min

[N][T][T][N][T]
Common Charges Associated with a Home Loan2026-01-02 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Top 5 Home Loan Benefits for First-time Woman Buyers2024-05-14 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Hybrid Flexi Loan vs. Personal Loan: Which One is Better?2024-01-24 | 3 min

[N][T][T][N][T]
3 Ways to Reduce Your EMIs with a Home Loan Balance Transfer2024-05-08 | 5 min

cibil Cibil
[N][T][T][N][T]
What Does Your Credit Score Tell About You?2024-06-11 | 5 min

home+loan Home Loan
[N][T][T][N][T]
All You Should Know About Home Loan Disbursement and Sanctioning Process2024-03-19 | 3 Min

home+loan Home Loan
[N][T][T][N][T]
What Is a Pre-Approved Home Loan and How Should You Get It Done?2024-03-12 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Top Benefits of a Loan Against Property Over Collateral-Free Loans2024-01-09 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan vs Loan Against Property: A Complete Comparison2023-11-29 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Difference Between Home Loan and Personal Loan: Which is better?2024-03-04 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Why Should You Choose a Balance Transfer on Your Home Loan?2023-02-01 | 4 min

cibil Cibil
[N][T][T][N][T]
How Does Being A Loan Guarantor Affect Your Credit Score?2024-03-13 | 4 min

cibil Cibil
[N][T][T][N][T]
How Business Loans Affect Your CIBIL Score & How to Improve the Same2024-03-13 | 6 min

cibil Cibil
[N][T][T][N][T]
How Can Customers Check Their Credit History?2023-06-14 | 3 min

cibil Cibil
[N][T][T][N][T]
How Can Your CIBIL Score Help in Negotiating Better Home Loan Deals2023-05-18 | 4 min

cibil Cibil
[N][T][T][N][T]
Here Is How a Bounced Cheque Can Affect Your CIBIL Score2023-06-06 | 5 min

cibil Cibil
[N][T][T][N][T]
What is Credit Mix and How to Boost Your Credit Score?2023-03-27 | 7 min

home+loan Home Loan
[N][T][T][N][T]
How Can Your Credit Score Impact Your Home Loan Interest Rate?2024-02-13 | 6 min

cibil Cibil
[N][T][T][N][T]
How Does Your Digital Footprint Affect Your CIBIL Score?2024-03-20 | 5 min

home+loan Home Loan
[N][T][T][N][T]
How Digital Platforms Are Revolutionising the Face of Housing Finance2023-12-21 | 7 min

cibil Cibil
[N][T][T][N][T]
How Does Missing One Payment Affect Your CIBIL Score?2024-05-15 | 4 min

loan+against+property Loan Against Property
[N][T][T][N][T]
5 Important Reasons to Opt for a Loan Against Property to Start Your Own Business2023-02-10 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Differences Between Fixed and Floating Interest Rates2024-05-15 | 2 min

home+loan Home Loan
[N][T][T][N][T]
How to Get a Better Interest Rate on Your Home Loan2024-01-04 | 5 min

[N][T][T][N][T]
Everything You Need to Know About Home Loan Tax Benefits2024-04-23 | 6 min

home+loan Home Loan
[N][T][T][N][T]
A Complete Guide for Home Loan Insurance2023-04-03 | 4 min

[N][T][T][N][T]
Loan Against Property for Doctors: An Essential Checklist2024-05-07 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Understanding Loan-to-Value Ratio (LTV) and its Calculation2023-11-28 | 4 Min

tax Tax
[N][T][T][N][T]
Everything You Should Know About Tax Savings When Taking a Home Loan2023-01-09 | 5 min

cibil Cibil
[N][T][T][N][T]
How to Check, Calculate, and Improve CIBIL Score?2024-01-11 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Everything You Need to Know About Top-up Loans on a Home Loan2024-04-09 | 6 min

cibil Cibil
[N][T][T][N][T]
Everything You Should Know About Your CIBIL Score2024-02-09 | 7 min

home+loan Home Loan
[N][T][T][N][T]
What Factors Decide Your Home Loan Interest Rates?2024-05-29 | 6 min

cibil Cibil
[N][T][T][N][T]
What Factors Do Not Affect Credit Scores?2024-02-28 | 7 min

home+loan Home Loan
[N][T][T][N][T]
Factors Determining Your Home Loan Eligibility2024-03-13 | 4 min

cibil Cibil
[N][T][T][N][T]
How can I Remove Loan Inquiry from CIBIL Credit Report2024-01-22 | 5 min

cibil Cibil
[N][T][T][N][T]
Check CIBIL Score with PAN Card for Free, in 3 Steps2024-02-27 | 5 min

home+loan Home Loan
[N][T][T][N][T]
How to Pick the Best Home Loan Tenor that Suits Your Budget2023-06-29 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Common Mistakes to Avoid When Applying for a Home Loan2023-12-04 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Common Myths About Home Loans: All You Need to Know2024-04-08 | 5 min

cibil Cibil
[N][T][T][N][T]
10 Common Myths About CIBIL Score2024-03-27 | 4 min

home+loan Home Loan
[N][T][T][N][T]
7 Common Problems You May Face While Applying For Home Loan2024-01-18 | 7 min

tax Tax
[N][T][T][N][T]
Comparison Between New Tax Regime vs Old Tax Regime2024-04-10 | 5 min

cibil Cibil
[N][T][T][N][T]
A Helpful Guide to Understanding Your Credit Report2024-01-26 | 5 min

cibil Cibil
[N][T][T][N][T]
Introduction to Credit Information Bureau India Limited (CIBIL)2024-04-15 | 6 min

cibil Cibil
[N][T][T][N][T]
Difference Between Credit Score and CIBIL Score2024-02-15 | 5 min

home+loan Home Loan
[N][T][T][N][T]
What is the Difference Between Top-up Loan and Home Improvement Loan2023-01-11 | 5 min

tax Tax
[N][T][T][N][T]
Difference Between Old vs. New Tax Regime2024-08-22 | 5 min

home+loan Home Loan
[N][T][T][N][T]
6 Point Differentiation Between Home Loan Vs Home Construction Loan2023-02-15 | 6 min

cibil Cibil
[N][T][T][N][T]
Does a Name Change Affect Your Credit Score2024-01-07 | 4 min

cibil Cibil
[N][T][T][N][T]
Does Applying for Credit Affects One's CIBIL Score?2024-03-14 | 3 min

cibil Cibil
[N][T][T][N][T]
Does CIBIL Score Affect Loan Against Property Eligibility?2023-02-15 | 7 min

cibil Cibil
[N][T][T][N][T]
Will a Loan Settlement Ruin My CIBIL Score?2023-03-21 | 4 min

home+loan Home Loan
[N][T][T][N][T]
What is Foreclosing a Home Loan? These are Some of the Do’s and Don’ts2023-12-20 | 6 min

cibil Cibil
[N][T][T][N][T]
Easy Ways to Maintain a Good Business Credit Score2024-01-10 | 5 min

cibil Cibil
[N][T][T][N][T]
10 Effective Strategies for Boosting Your Credit Rating2023-03-24 | 6 min

loan+against+property Loan Against Property
[N][T][T][N][T]
What Are the Eligibility Criteria for Obtaining a Loan Against Property?2023-03-28 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Benefits of Submitting a Digital Home Loan Application in Current Times2023-12-20 | 4 min

tax Tax
[N][T][T][N][T]
Top Benefits of Using an Online Income Tax Calculator2023-12-28 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Best Credit Score for Home Loans & How to Improve Yours2023-08-31 | 6 min

home+loan Home Loan
[N][T][T][N][T]
Get Your Down Payment Funds Ready with These 5 Easy Steps2023-03-20 | 5 min

cibil Cibil
[N][T][T][N][T]
Boost Your Credit Score By Minding The Factors That Affect It2023-03-20 | 5 min

home+loan Home Loan
[N][T][T][N][T]
What Happens If Home Loan EMI Bounces? Know the Consequences2024-07-11 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Would it be Possible for Me to Apply for a Second Mortgage?2024-05-22 | 3 min

cibil Cibil
[N][T][T][N][T]
How to Check Your CIBIL Score for Free and What to Do If There Are Errors in It2024-06-05 | 4 min

[N][T][T][N][T]
Checklist of Documents Required for Home Loan2024-02-07 | 5 min

cibil Cibil
[N][T][T][N][T]
CIBIL Score Charges & Services You Must Know2023-04-04 | 2 min

cibil Cibil
[N][T][T][N][T]
What to Know About CIBIL Score 2.02024-06-20 | 3 min

tax Tax
[N][T][T][N][T]
Can I Claim Home Loan Tax Benefits on an Under-Construction Property?2024-05-23 | 5 min

tax Tax
[N][T][T][N][T]
How to Claim Tax Benefits on Joint Home Loans2024-07-10 | 4 min

cibil Cibil
[N][T][T][N][T]
Some of the Common Credit Mistakes to Avoid2023-03-21 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Advantages of Including a Co-Applicant on Your Home Loan2024-01-21 | 7 min

home+loan Home Loan
[N][T][T][N][T]
A Complete Guide on the Benefits of Joint Home Loan2022-11-16 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan Balance Transfer: Benefits, Eligibility, and More2024-05-15 | 3 Min

home+loan Home Loan
[N][T][T][N][T]
Advantages for First-Time Home Buyers2023-07-14 | 4 min

home+loan Home Loan
[N][T][T][N][T]
An Essential Guide to Refinancing a Home Loan2024-04-22 | 5 Min

home+loan Home Loan
[N][T][T][N][T]
All About Home Loan Balance Transfers2024-06-04 | 4 mins

home+loan Home Loan
[N][T][T][N][T]
All You Need to Know About Home Loans2023-01-19 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Should I Apply for a Pre-Approved Home Loan or an After Property Finalisation Loan?2024-03-15 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Are Registration Charges Compulsory When You Opt for a Home Loan?2024-04-15 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Difference Between Bank Rate and Repo Rate2023-09-22 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Fees and Charges on Your Loan Against Property