Revolving Credit or Installment Loans: Which is Better for Your Credit?

April 21st, 2017 | Author:

[I]f you’ve been learning about credit, one of the first things you’ll hear is you can’t get credit if you don’t have credit. It often seems to be a Catch-22; no one will give you credit so you can’t get established with a credit history so you can get new credit.

With diligent effort, you can get approved for a credit account. You may need a co-signer to qualify or collateral, but you can get approved. The next question is which kind of credit is best to start out with.

Revolving Credit

Revolving credit means it continues even when you pay off the balance. Credit cards are a type of revolving credit. You’re given a credit limit that you can use over and over as long as you make the minimum payments each month.

To qualify for this kind of credit if you’re just starting out, you may need a secured credit card. This means you pay a deposit, which becomes your credit limit. After so many payments on time, you may get your deposit back.

Because of the continual availability of credit, this type is usually given a lot of attention by lenders. They want to see you’ve been able to manage your credit cards responsibly.

Installment Loans

These are personal loans, auto loans and home loans. This type of credit gives you enough funds to use as you intend, but you must pay it off before you can apply and use it again. Once you have paid it off, the account is closed.

A personal loan is often easiest for a beginner to get, especially if they have a co-signer or collateral they can use. It will likely be only for a few hundreds of dollars, but it can help you establish a credit history.

While lenders don’t look as closely to this type of credit, they do want to see you paid off your debt in a timely manner.
Both kinds of credit are good for establishing a history and it’s good to have a mix, but revolving credit will do more good in the long run.

Newest Answers

What is Your Credit Personality?

September 18th, 2017 | Author:

[P]eople have different views on credit and they handle it in various ways. It can be helpful to determine what your credit personality is so you can do a better job of managing it and avoiding temptation, which can get you in trouble. See if you identify with one of these people. The Spender You […]

Continue Reading »

6 Ways to Get and Stay Out of Debt

September 15th, 2017 | Author:

[I]f you’re like most people, you have some debt. For many, that debt may be overwhelming and even crippling. You can’t do things you’d like to because you have to pay too many credit cards and loans. Here are six ways to get out of debt and stay out of debt. Get Out of Debt […]

Continue Reading »

Why Life Insurance is Important

September 13th, 2017 | Author:

[Y]ou get those life insurance mailers or see ads on TV and you may ignore them. If you’re relatively young and in good health, you may wonder why life insurance is important for you. Protecting Your Future Life insurance is designed to be paid out when you die, so how can it possibly protect your […]

Continue Reading »

Saving Money on Groceries and Why It Will Help Your Credit

September 11th, 2017 | Author:

[W]hen you compare the cost of food to your income, you can see why groceries are such a big part of the budget for many families. It’s easy to spend $200 or more each week to feed a family of three or more. However, there are ways you save money on the groceries you buy. […]

Continue Reading »

Before You Rent Your First Apartment

September 9th, 2017 | Author:

[W]hether you’re a returning college student ready to move out of the dorms and into an apartment or a recent graduate getting a full-time job, one of the big decisions you will make is where you’ll live. If you’ve never rented an apartment before, the process may be exciting and even a bit overwhelming. Before […]

Continue Reading »

3 Things to Consider When Buying a Car

September 8th, 2017 | Author:

[B]uying a car is a major investment. It can be fun, especially when you see all of the new features and systems that are available. However, it should also be a serious decision that you make after considering the following three things. 1. Your Credit If you have good credit, you’ll find it much easier […]

Continue Reading »

Common Mistakes People Make with Credit

September 7th, 2017 | Author:

[W]hen you get approved for a credit card or account, it’s a powerful, exciting feeling. You begin imagining how having this credit card is going to change your life. Before you get too excited and start using your new credit card, you should know the most common mistakes that people make when it comes to […]

Continue Reading »