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Credit Mix Explained

In today’s world, it’s hard to get by without taking out a loan every now and then. Whether it’s for a credit card, an automobile loan or a mortgage, our modern lives demand access to easy credit. On the other hand, credit is a double-edged sword in more ways than one. While enabling us to purchase far more than we could before, it has also opened up more pathways to insolvency for many struggling with the financial burden.

Credit Mix Explained

Credit is malleable, it can be added or taken away and it can be shaped in different ways and learning how to change it in your favour can be a massive aid. Credit mixing is the process of diversifying the type of credit accounts or loans that you take out. It is determined by myFICO, the consumer division of the FICO, the company that invented and uses the most widely recognized credit scores. It states that credit mixing accounts for 10% of an individual’s score. Negative payment history on the other hand is more substantial and accounts for 35% of your credit score.

The 2 Different Types of Credit Accounts

  1. Revolving / Closed-End Credit

    Revolving credit involves an individual being given access to a line of credit (a credit account available at the borrower’s discretion and can be borrowed from up to a certain limit, generally on a monthly basis). The funds taken out of these lines of credit are generally paid back in regular monthly installments and each payment replenishes the funds in the line of credit for future use.

    Generally, revolving credit does not offer any expiration/maturity dates. The credit limit and subsequent variable interest rates provided are largely dependent on your credit score, credit history and income. Examples of revolving credit include credit cards, personal lines of credit and home equity loans.

  2. Installment/Open-End Credit

    Installment credit is generally an agreed-upon lump sum of money that is handed over to the borrower as soon as the agreement goes into effect. These funds become instantly available to you and are generally repaid through fixed installments every month until the balance is paid out in full. These monthly payments also tend to have a fixed interest rate. 

    While more limiting than revolving credit in its nature because it forces the borrower to borrow an agreed-upon sum and repay it in full, installment credit has a predictability to it that allows long-term planning for the future without worrying about future market fluctuations. Some examples of installment accounts include personal loans, car loans and fixed-rate mortgages.

Why You Should Care

The type of credit that you choose to take out to finance your needs and where you choose to implement each credit account is key to developing a successful strategy for credit mixing. If done right, credit mixing can allow you to show off an effective resume of paying off your loans on time which gives lenders greater confidence in your financial ability. 

According to a 2019 Angus Reid Fair Banking Perspectives study with a sample pool of more than 2000 borrowers, the most difficult loan payments to pay off are payday loans with 44% stating their loan is staying constant or increasing, student loans at 39% and loans from family and friends also at 39%. While keeping your loan portfolio varied improves lender’s confidence, these are ones that you should avoid.

Personal loans come out as one of the best performing loans with 83% reporting that they are paying it off and their loan is steadily decreasing. At MagicalCredit, we understand that loans can be a bother, that’s why our mission is to make ours as accessible, comprehensible, and easy to manage as possible. At www.magicalcredit.ca, we offer users an interactive platform featuring a loan calculator for all personal loans taken out as well as a payment plan depending on the amount borrowed, the length of the loan and the frequency of payment periods (biweekly, monthly, or semi-monthly).

Why Pick MagicalCredit?

Our personal loans have interest rates starting from 3.5% with the duration of your loan being negotiable anywhere from a 6 month to 60 month period with our annual percentage rates starting from 19.99%. The 5-minute application process is simple and accessible and you can expect to get a reply back within 24 hours. If you are accepted, the funds will be promptly deposited directly into your account so you can worry less about the transaction and more about your needs.

MagicalCredit offers a variety of bad credit loans for individuals from all walks of life who have perhaps endured some financial hardships in the past or made some bad decisions. Regardless of your past, at MagicalCredit we understand people make mistakes and are willing to take you in even when big banks say no. Unlike big banks that don’t tend to offer loans to people with below fair credit scores (i.e. below mid 600s), MagicalCredit assesses your current financial situation to make a more informed decision.

Diverse Opportunities, Concrete Results

We understand that life doesn't always go according to plan and if you find non-traditional sources of income, MagicalCredit understands that those aren’t grounds for rejection. also accept government child tax benefits as a reliable source of income. Whatever your situation, we’re here to listen and keep our promise of delivering accesbile and reliable loans.

Our loans are also available for any use. We offer loans for purposes from childcare expenses and legal fees to medical emergencies and bill payment loans. 

Installment Loans - Your Options

In terms of installment loans, MagicalCredit is partnered with leading mortgage providers to bring you the best deals on mortgages, home equity loans and home refinancing. 

When partnering with MagicalCredit, we can assure you that we can green light your way towards a stable financial future through our flexbile payment plans and loan options. It’s not a matter of how much money you have but who you are and at Magical Credit, we understand the distinction.

Our mantra is: “Everyone deserves the opportunity to get a loan when they need it.” And we will always pledge to stick to that oath. Hvauing a variety of credit options for effective credit mixing can not only boost your credit score and thus chances of getting accepted for credit in the future but also your experience with paying off various types fo credit. This experience can be a massive help for whenever the next loan is needed for a child’s tuition, vacation or a new mortgage.

Expansive Portfolios and Stable Finances

Throughout all this, MagicalCredit is here to help with an experienced financial team and debt resolution specialists to help you map out a comprehensive payment plan. 

We understand that credit mixing can be important for your financial portfolio which is why we offer clients a variety of credit options and payment plans. Your credit score is important, as mentioned previously, negative history of payment accounts for 35% of your score while the ways you use that credit account for an additional 30%. These are often factors that are difficult to control.

On the other hand, credit mixing is something that can be done at any time to boost the lender's confidence in you and make yourself available and financially secure for the future. If you’re interested in a range of loan options, visit www.magicalcredit.ca for more information!

Our loans are considered short-term loans and have a 12-60 month term with a fixed interest rate of 3.9% per month.

Example: $1,500 borrowed for one year at 3.9% per month. Monthly payments are $199.05. Total payback with interest and fee of $194.00 is $2,388.54.

NOTE: You can pay off your loan at any time with no penalty. You will only pay interest up to the date you pay it off.

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