3. The Holy Grail Credit Mix

Hello, and welcome to this module. The “Holy Grail” Credit Mix. So at this point, we understand our foundation. We also understand the difference between installment, revolving credit, and our debt to income ratio. Now I’m going to get into the nitty-gritty of what the actual mix needs to look like and what FICO determined. So here is what we’re going to cover. So the first thing I’m going to get into is how FICO determines your credit mix. So you understand this and you can take advantage of all the points available in this particular section. Then I’m going to break down what is the perfect credit mix for yourself. The total number of revolving accounts you want to have. The total number of installment accounts that you want to have, and then I’m going to end with the credit mix foundation that you’re going to execute at the end of this week.

So it’s important going into this, that you get exactly what this looks like, how it’s going to take into account with your credit situation. Then we’re going to backdoor into implementing everything. So up to this point in this week, we have been all about identifying and educating you on how all this information works. So we know specifically our credit age, we know our debt to income ratio. We know our mix of accounts. Now we’re going to get into the specifics. So how does FICO determine your credit mix? Well, that’s a really good question. FICO considers your mix of credit cards, retail accounts, installment loans, finance company, and mortgage loans. So this is how they’re going to look at what they consider to be a credit mix. Now, the issue with this is if you’re at a place where you’re looking to rebuild credit, you may not have the ability to go out and get what FICO considers to be the proper credit mix.

Not to worry. I’m going to show you how to go out and get this, but this is what FICO considers this. Now lenders want to know when it comes to your credit mix, how well you manage these different types of credit. So we want to get this point. We want to get the points available here because when you have the proper credit mix, coupled with excellent payment history, which you now understand, i.e the 35% of your score, what the proper credit mix, this makes you a lower credit/lender risk. So when they’re looking at the fact that, hey, look, this person has their payments made on time. This person has the proper mix of accounts. They have the proper foundation in place. We’re going to consider this person to be a lower risk because they’re not too overly weighted. They understand how this process works.

They’ve been managing things efficiently and effectively. Yes, we will loan them money. So this is how they determine now, what is the perfect credit mix? Well, you want to have 3-5 revolving credit accounts. We already understand what revolving credit accounts are, but that’s what we want to have. We want to be shooting for 3-5, minimum 3, maximum 5 when we’re starting this process, and generally speaking, this can be made up of credit cards and or retail lines as well. So it doesn’t necessarily have to be a traditional credit card because you may be wondering in the back of your mind. Well, Kenney, I’m at a place where I just cleaned my glass, man. I don’t even know if I’ll be able to get approved for any type of credit cards, not to worry. I’m going to show you where exactly how and why

and when, and what type of revolving lines of credit accounts we’re going to get to fulfill this portion of the credit mix. Then what we want to do is we want to have 3 installment accounts as well. So at this point we understand installment loans and installment accounts. So this can be a mortgage. So if you don’t have a mortgage, not a big deal, doesn’t necessarily matter. It could be a credit builder loan, which is ideal, and I’m going to cover this in one of the modules this week, it could be a student loan. So again, that’s why I said early on, do not challenge student loans that are in good standing, deferred or in forbearance. Those are helping you with your credit mix. And if you don’t have a student loan, it can be an auto loan. Again, this is why I said upfront, do not challenge an open auto loan that has fairly decent or good payment

history, right? So

these are the installment and accounts that we want to have in this order. So if we can go out and get a mortgage right now, it’s okay. The next best thing is a credit builder loan, and I’m going to show you exactly how to go out, where to find them, how to establish them. So you don’t have to worry about it, but I’m just breaking this down so that way you understand exactly what type of installment accounts are used, and even if you don’t have any of these, you may be in this scenario, we don’t have student loans or auto loans or mortgage, and you need to get three, not a big deal. I’m going to show you how you can get all three, even if you don’t have the other ones. So, but this is the mix. Now the mix foundation for you.

So this is a fairly quick, quick holy grail module, but you need to get this. Now the account mix we want to have is 5 ideally revolving lines of credit accounts and three installment lines of credit accounts. So what this is going to do is give us all 55 points available in this scenario because we’re going to be hitting the mix that FICO wants to see from a foundational level. This person is using three revolving accounts responsibly. They have three installment loans responsibly in our algorithm. We’re going to give them, we liked them. We liked this. They’re a good mix. That 10% is covered. We’re going to maximize that 55 points available. Now, why more revolving credit? Well, the reason the why is because as we’ve already discovered and we’ve already discussed, revolving lines are weighted heavier towards the amount that you owe section, which means that 30% or and that 165 points available,

revolving credit is really what determines that amount of credit. So that’s why your utilization is so so key. That’s why I was breaking down how to make sure we have low utilization and or what to do. So in the next module, I’m going to break down exactly how we can get the most amount of revolving credit, and pay down our existing revolving balances if we have them, but if we don’t have them, this is weighted heavier in terms of the credit mix. Which is why we want to have 5 revolving lines of credit. Access to that availability because it’s going to help us maximize all of those points available in that section. Then at the end, this is going to give us a total of eight accounts reporting on time payment history, which is what we want. Now, with that being said, guess what we’re doing?

We’re taking advantage of that 35% and or 192.5 points. So now we get it. This is us maximizing what the holy grail credit mix what I started this week off with, with the 412. I am literally getting myself in position to get 412 points available to me, maximized on my credit file, and this is the “Holy Grail” Credit Mix. I wanted to create a module specifically for this. So you understand why this is so important because as you already understand, if we’re starting at that 300 credit score, right? And we do these things, all of these things correctly, starting from scratch, then we can’t help, but get 412 points, 412+300 is a 712 credit score, and this is the mix of accounts that we want to have. So in the next few modules, I’m going to break down exactly how, where, how and where to establish the proper amount of revolving accounts and how and where to establish the proper amount of installment accounts.

Even if you are not at a place where you’re ready to have a mortgage or auto loan, right? Because at the end, we’re still going to get these accounts reporting on our file. Okay? So with that being said, take action, and I will see you in the next module. Matter of fact, before you take action, what I want you to do is look at your current account mix right now, because you may already have one revolving account. You may already have a student loan. You may already have an auto loan, and if that’s the case, then that’s going to help you in that category. Right? But I don’t want you to go out and try and get a student loan or an auto loan or mortgage loan right now without having the proper score and account content to back that up. So if you’re at a place where you need to get these revolving accounts, then follow what I’m going to break down in the next two modules. Now, your action step is to look at your credit report and see what accounts that you currently have in this category, and then in the next module, I’m going to break down exactly how to go out and start establishing the revolving side of these accounts. All right. See you there.