What are the different types of credit accounts & how do they impact your credit scores?

Good credit isn’t just about paying your accounts on time, though that’s important. Having a strong credit mix, or a variety of different types of accounts, is another factor many credit scoring models consider when calculating personal or business credit scores. 

Credit mix is one of the five main FICO^® score factors, and FICO reports it accounts for 10% of the FICO score.  

Those with the strongest credit scores tend to have provable experience managing both revolving credit accounts (like credit cards) and installment accounts (like mortgages or car loans).

What are the types of personal credit accounts?

Credit accounts that appear on consumer credit reports generally fall into two broad categories — revolving credit and installment credit. Each type affects your credit scores differently, and having both types may strengthen your credit profile.

Revolving credit: credit cards and lines of credit

Revolving credit accounts feature a credit limit that you can borrow against, pay down, and borrow against again. 

Credit cards are the most common form of revolving credit. You make purchases throughout the month, then pay at least the minimum payment by your due date. Lines of credit work similarly — you draw funds when needed and pay them back over time.

Credit cards can also have a strong impact on your credit scores, but only if you pay on time and keep balances in check. 

Most consumer credit scores evaluate your credit utilization ratio, which compares your balances on your revolving accounts like credit cards to your available credit (credit limits). Keeping your utilization below 30% may benefit your credit scores, and lower may be even better. FICO® reports that consumers with “perfect” 850 FICO scores use about 4% of their available credit.

Installment credit: loans and mortgages

Installment credit means you borrow a fixed amount and repay it in regular payments over a set period. Once you pay off the loan, the account is closed. 

Common installment accounts include:

• Auto loans
• Student loans
• Personal loans
• Mortgages
• Home equity loans

These accounts contribute to your credit mix differently than revolving credit, depending on how they are reported and paid. Payment history is the most important factor. Making consistent, on-time payments builds a strong payment history and helps your scores.

Unlike revolving credit, installment loans don't calculate a utilization ratio since the balance naturally goes down as you make payments.

Other personal credit account types

Some credit accounts don't fit neatly into revolving or installment categories, but they still matter for building credit.

Secured credit cards require a cash deposit that becomes your credit limit. They work like regular credit cards and report to credit bureaus the same way. They can be useful tools if you're building credit from scratch or rebuilding after credit damage. But since credit limits are low, you’ll need to be careful to avoid balances that can result in a high utilization ratio. 

Retail credit cards — store cards you can only use at specific retailers — often also report to credit bureaus. A type of revolving account, they often come with lower credit limits and higher interest rates than general-purpose credit cards, but they count toward your credit mix.

Credit builder accounts flip the traditional loan model. Instead of borrowing money you pay back, you make payments toward a savings account that is yours to keep. Lenders who make these loans typically report them to credit bureaus as installment loans, and paid on time, they can act as a credit reference that contributes to payment history and credit mix.

Types of business credit accounts and their impact on business credit scores

There are many kinds of business credit accounts, which we cover below, including:

• Vendor credit and tradelines
• Business credit cards
• Business loans and lines of credit
• Equipment financing and leases

Business credit scoring models need data to make predictions about how your business will handle credit. A mix of credit accounts paid on time can help to build that foundation.

When it comes to this factor, though, business credit often works differently than personal credit in some important ways: 

1. Not all accounts report to all the major credit bureaus, such as Dun & Bradstreet (D&B), Equifax (Business), or Experian (Business). Some accounts report to one bureau, for example, and some don’t report at all. 
2. Just because an account is submitted to the credit bureaus, that doesn’t mean it will help your credit score with a specific type of credit score. A bank line of credit, for example, may not figure into a credit score used to evaluate businesses for supplier credit. 
3. Account mix may matter less in some business credit scoring models than it would with personal credit scores.

If your business credit report only lists one or two accounts, you may not have enough information for bureaus to calculate a score, or the score may be low simply due to lack of data. Different scoring models have different requirements — D&B's PAYDEX® score, for example, needs at least two tradelines with three trade experiences to potentially generate a score.

Vendor credit and tradelines

When suppliers let you buy now and pay later — typically with payment terms like net-30 or net-60 — that's vendor credit (aka trade credit). In addition to helping improve cash flow, they may also be a valuable type of credit reference.

Vendor credit (also known as trade credit) may be reported as tradelines to business credit bureaus — if the vendor reports. Since not all vendors report, you need to look for accounts that do if credit building is your goal. 

For businesses just starting to build credit, they're often easier to obtain than traditional business loans because vendors hope you’ll regularly purchase their products. It’s often possible to start with smaller orders, pay on time or early, then gradually increase your purchase volume.

Several types of companies offer starter trade lines specifically designed to help businesses build credit:

• Office supply vendors
• Shipping and freight companies
• Telecommunications providers
• Fuel card programs

Use Nav’s list of net-30 accounts that report to help identify companies that may be a fit for your business. 

Business credit cards

Business credit cards may also be a valuable credit reference when paid on time, but not all  report directly to business credit bureaus. All of the top ten major small business credit card issuers report to the Small Business Financial Exchange (SBFE), which collects data from financial institutions and shares it with credit bureau partners. 

These cards can strengthen your business credit profile, though they may not appear on all business credit reports the same way vendor accounts do. SBFE data often gets incorporated into commercial credit reports and scoring models that lenders purchase, though it does not factor into all credit scoring models.

Because credit cards offer credit limits, credit utilization can be a factor. Keeping balances low relative to your limits may help with certain business credit scoring models. 

Business credit cards can also offer practical benefits beyond credit building—expense tracking, employee cards, rewards programs, and separation of business and personal finances.

Business loans and lines of credit

Term loans, SBA loans, and lines of credit from commercial lenders typically report to business credit bureaus and/or the SBFE. When credit scoring models evaluate them (not all do), these accounts can carry significant weight because of the large financial commitment. 

Business term loans work like installment loans — you borrow a lump sum and repay it over a fixed period. Many SBA loans are term loans, as are many commercial real estate loans. Online lenders may also offer term loans. 

Business lines of credit are a type of revolving credit. You can draw funds up to your credit limit, repay them, and draw again. They provide flexibility for managing cash flow gaps or seizing growth opportunities.

Making timely payments on these accounts builds strong business credit history. Some scoring models give more weight to financial accounts (loans and lines of credit) compared to non-financial accounts (vendor credit).

Equipment financing and leases

Equipment financing and leases often report to business credit bureaus or to the SBFE, potentially adding another type of account into the mix on your credit profile. 

Equipment loans work like other term loans — you borrow money to purchase equipment and repay over time. Equipment leases let you use equipment for a set period with the option to purchase, return, or renew at lease end.

Both can help build business credit if the lender reports to business credit bureaus. 

Payment history is tracked the same way as other credit accounts, so consistent on-time payments may strengthen your profile.

Strategies for building a diverse credit mix

Building a diverse credit mix doesn't happen overnight, but strategic planning can speed up the process. The approach differs for personal credit and business credit.

For personal credit

Start where you are. If you only have revolving credit (credit cards), consider adding an installment account. If you're hesitant to take on a major loan, look at smaller options.

Credit builder loans through credit unions or online lenders let you build installment credit while saving money. You make monthly payments into a savings account, and the lender reports your payment history. Once you've paid the full amount, you get the funds.

Secured loans work similarly. You borrow against your own savings account or certificate of deposit, making them low-risk for lenders and easier to qualify for than unsecured loans.

Authorized user status on someone else's credit card can help, but the impact varies by scoring model. Some models count these accounts toward your credit mix, while others don't. It's not a primary strategy, but it can supplement your own credit-building efforts.

Never take on debt solely to improve your credit mix. Only borrow when you have a genuine need and can afford the payments. Missing payments damages your credit far more than a thin credit mix.

Pay attention to timing. Opening multiple new accounts in a short period can temporarily hurt your credit scores. Space out applications and focus on maintaining good payment history on existing accounts.

For business credit

Start by getting a D-U-N-S® Number through Dun & Bradstreet. This unique identifier is required for building business credit with Dun & Bradstreet, similar to how a Social Security number works for personal credit.

Next, open accounts with vendors that report to business credit bureaus. You may want to start with net-30 vendor accounts that are relatively easy to obtain. 

Make purchases, pay on time or early, and gradually expand your vendor relationships. Many business owners find it helpful to start with 3-5 vendor accounts to establish a payment history. 

Consider also applying for a business credit card that reports to business credit bureaus or SBFE. You can use it regularly for business expenses and pay the balance in full each month.

After establishing vendor accounts and a business credit card, you're in a stronger position to apply for a small business loan or line of credit. These financial accounts add weight to your business credit profile.

Keep your business and personal finances separate. This makes it easier to build a distinct business credit profile and protects your personal credit if your business faces financial challenges.

Monitoring your credit mix: understanding your credit report

You can't improve what you don't measure. Regularly reviewing your credit reports helps you understand your current credit mix and identify opportunities for improvement.

Key sections to review

Personal credit reports from Equifax, Experian, and TransUnion list all your open and closed accounts. Look for the "accounts" or "credit accounts" section, which typically breaks down your accounts by type.

You'll see revolving accounts and installment accounts listed separately or tagged with account type indicators. Check that all accounts are reporting accurately—correct balances, payment history, and account status.

Business credit reports look different than personal credit reports. They focus more on tradelines and payment experiences. Dun & Bradstreet, Experian, and Equifax each maintain separate business credit databases with potentially different information.

Your Dun & Bradstreet report lists trade lines and payment experiences. Look for the number of accounts reporting and your payment history in days beyond terms (DBT).

Experian's business credit report shows payment trends, credit accounts, and public records. It breaks down your accounts by type and shows how long each has been reporting.

Equifax's business credit report includes active trade lines, balances within terms, and public filings. Pay attention to the "What to focus on" section, which highlights factors affecting your score.

Identifying areas for improvement

After reviewing your reports, look for gaps in your credit mix:

• Do you have any open revolving accounts? If not, you may want to consider getting a credit card or charge card.  
• Do you only have revolving accounts? Consider whether adding an installment loan might be beneficial.
• For business credit, do you have fewer than four accounts reporting? Focus on establishing more vendor relationships.

Check for accounts that should be reporting but aren't. If you have a loan or credit card that doesn't appear on your credit report, contact the lender to ask if they report to credit bureaus.

Look at your payment history. Even with a diverse credit mix, late payments hurt your scores more than a limited account mix. If you see late payments, focus on building a strong on-time payment pattern going forward.

Make a plan based on what you find. If you need more installment credit, research credit builder loans or small personal loans to see if there is a fit. 

If your business needs more trade lines, identify vendors in your industry that report to business credit bureaus.

6 common misconceptions about credit account types

Several myths persist about how different credit account types affect your scores. Let's clear up the confusion.

Myth #1: You need one of every account type to have good credit

Reality: Credit mix accounts for only about 10% of your FICO score. Payment history (35%) and amounts owed (30%) matter much more. Having just revolving or just installment credit won't necessarily drop your scores if you handle those accounts well.

Myth #2: Closing paid-off loans immediately hurts your credit mix

Reality: Closed accounts often continue to appear on your consumer credit reports for up to ten years after closing, continuing to contribute to your credit mix during that time. The immediate impact of closing a loan is usually minimal.

Myth #3: Store credit cards don't count as "real" credit

Reality: Store cards report to credit bureaus the same way as major credit cards. They count toward your revolving credit total and affect your credit utilization. The main difference is you can only use them at specific retailers.

Myth #4: Business credit accounts always stay separate from personal credit

Reality: Some business credit scoring models evaluate both personal and business credit data when calculating scores. Examples include FICO® Small Business Scoring Service℠ (SBSS℠) and some versions of Experian Intelliscore Plus^SM.

This is optional and depends on which scoring model a lender uses. However, business credit accounts typically don't appear on personal credit reports unless you personally guarantee the debt and default.

Myth #5: You should carry a balance on credit cards to improve your credit mix

Reality: You don’t have to pay interest to build credit. Paying your balance in full can help keep utilization low. Credit mix is about having different types of accounts, not about carrying debt.

Myth #6: All lenders care equally about credit mix

Reality: Different lenders and different credit scoring models weigh factors differently. Some focus heavily on payment history and current debt levels, caring less about credit mix. Credit mix matters more when other factors are similar between applicants.

Frequently asked questions