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

3 Mistakes People Make When Trying to Improve Bad Credit

July 17th, 2017 | Author:

[Y]ou get a lot of advice when you research online about how to improve bad credit. Some of it is not so good, a waste of time or worse. There are three major mistakes that people make when they are trying to rebuild their credit rating. Mistake #1 – Hiring a Credit Repair Company You’ll […]

Continue Reading »

4 Steps to Improve Your Credit

July 14th, 2017 | Author:

[F]or people with bad credit, they are often looking for the easiest or best ways to improve their credit scores. While the quick-fix schemes promised by some companies don’t really work, there are some steps you can take on your own. You won’t see an improvement overnight, but your credit score will climb over time. […]

Continue Reading »

Why Credit Scores Matter and What They Mean

July 13th, 2017 | Author:

[Y]ou hear a lot about credit scores when you’re applying for a loan or credit card. You may also hear about good credit and bad credit when you get insurance or rent a vehicle or apartment. With all of this hype about credit scores, why do they matter so much? A Picture of a Moment […]

Continue Reading »

The Basics of a Credit Report

July 12th, 2017 | Author:

[I]f you’ve been researching about how to improve your credit, you’ve probably read about credit reports. Many times, articles and other information assumes you know what a credit report is and how it looks. For those without that knowledge, here are the basics. What Is a Credit Report? It’s a list of all of your […]

Continue Reading »

3 Ways to Get an Emergency Fund Fast

July 9th, 2017 | Author:

[T]he car broke down and the mechanic says it will cost $300 to fix it. It may not sound like much money, but for many people it means they can’t pay another bill. The reason is they don’t have an emergency fund, which can help them pay unexpected bills and protect their credit rating. An […]

Continue Reading »

3 Things You Need to Understand about an Emergency Fund

July 7th, 2017 | Author:

An emergency fund is something every adult should have. It provides funds to have on hand in case an unexpected expense comes up. It may be a car repair, sick person, home repair or other expense that you didn’t budget in. Many people try to build an emergency fund but fail. Here are three things […]

Continue Reading »

Should You Get Debt Counseling Help?

July 5th, 2017 | Author:

You’ve probably seen the ads for debt counselors, promising to help you get out of debt and improve your credit score. You may wonder if they can help you and if you should find a company to begin working on improving your credit score. Who Needs Debt Counselors First, you need to understand that many […]

Continue Reading »