Revolving Credit versus Installment Credit

Revolving credit is credit extended to you in the form of a major credit card or department store credit card. You will be given a maximum amount that you can charge on this card and then be assessed a minimum payment based on your current balance due. The interest rate is determined ahead of time, typically when you initially apply for the card. Revolving credit is a great starting point for those trying to establish a credit history for the first time. Your revolving credit will be displayed on your credit report. It is important to make sure you keep your payments up to date and on time, as late payments will negatively affect your credit score.

Installment credit is a fixed term amount and fixed term payments. Examples of an installment account would be a student loan, an auto loan or a home loan. Like revolving credit, your payment history will be reflected on your credit report. That includes on time payments and late payments. Defaulted loans on car loans and student loans, or foreclosures will remain your credit report for 7 to 10 years. To maintain a great credit score make sure to keep payments on all loans on time.

Obviously this covers only a very narrow focus on credit repair. To take it to the next level and get your credit score soaring upward, I highly recommend the Credit Secrets Bible. Not just a bible, but actually a series of books, cd’s and support. The Credit Secrets Bible is what got me started in repairing my own credit years ago, and is a great investment.