As a consumer, understanding the factors that make up your credit report is critical to ensuring your score is accurate. Unfortunately, many are unsure what matters can impact their score, meaning they may be unaware when mistakes occur. As such, familiarizing yourself with these different aspects is critical to ensure that you can act quickly in the event you believe there is an error on your credit report. One area many are unfamiliar with is their credit mix. The following blog explores this factor in further detail and covers why working with a Los Angeles, California inaccurate account information disputes laywer can assist you through these matters.
What Is a Credit Mix and What Impact Does It Have?
Your credit mix is a factor that can influence your credit score. Generally, the more diverse your credit history is, the higher your score is, as it shows your ability to maintain different types of credit. You should note, however, that your credit mix is often the least impactful factor that makes up your credit score. This typically only makes up about 10% of your score.
There are typically two different kinds of credit that will be reflected in your mix. Having a balance of both can help ensure that it positively impacts your credit score. The first is installment credit, which is reflected through a singular lump sum, often paid in monthly installments. Mortgages, auto loans, and student loans are all examples of installment credit.
The next kind of credit that can be reflected in your mix is revolving credit. These give you a credit limit, meaning you can only spend so much before you will be unable to use more funds. As you pay off the owed money, your limit opens, allowing you to make more purchases. Revolving credit includes credit cards or personal credit lines.
It’s important to understand that because your credit mix is not a major contributing factor to your credit score, you should not open unnecessary lines of credit just to improve your score. Generally, your credit mix will improve over time as your needs as a consumer change.
What Should I Do if I Think There Is an Error on My Credit Report?
Understanding the different factors that influence your credit score is critical, as you’ll want to ensure you can read your report accurately. This is necessary as understanding the different aspects allows you to see any errors or mistakes and have them remedied.
As such, if you believe there is an error on your credit report related to your credit mix or any accounts open in your name, the most important thing you can do is immediately connect with an experienced attorney to explore your legal options. Your attorney can examine the circumstances to determine the best course of action for your situation. Generally, this will include disputing the inclusion of the information with the reporting agency. However, having legal representation from the start gives you the best opportunity to ensure your dispute is accurate and thorough.
