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

Get a Better Credit Score in 2017

January 22nd, 2018 | Author:
h

[I]f you have a goal to improve your credit score for the new year, you need to set up steps to help you achieve this goal. For many, they read all kinds of information about how to get a good credit score, and it can be overwhelming. Sometimes, it can sound so easy but not […]

Continue Reading »

Why You Need to Check All Three Credit Reports

January 19th, 2018 | Author:
h

[T]here are three major credit reporting agencies: Experian, Equifax and TransUnion. All of them provide a credit report which lists your personal information and credit accounts. You can get one report for free each year or purchase extra reports through the agency sites. Many people just get one credit report, but you really should get […]

Continue Reading »

What is the Right Amount for a Credit Limit?

January 18th, 2018 | Author:
h

[A]s you get credit cards, you will notice they give you a credit limit. This is the maximum amount you can spend on the card without paying some of it off first. Credit card companies often increase your credit limit as you prove responsible handling the amount you have. You may wonder if more credit […]

Continue Reading »

Buying a Car with Bad Credit

January 12th, 2018 | Author:
h

[I]f you have bad credit, it can be difficult to qualify for a car loan. However, it’s not impossible. Before you go out and apply for money to purchase a vehicle, there are some things you should know. Check Your Credit Before you fill out any applications for car loans, you need to take a […]

Continue Reading »

What Does No Credit Mean?

January 10th, 2018 | Author:
h

[M]any people hear that they have bad credit, which means they haven’t always been responsible with their credit accounts. However, it is another situation entirely when a person is told they have no credit. You may wonder how that’s possible and what it really means for your future. No Credit Doesn’t Mean Never Any Credit […]

Continue Reading »

What You Need to Know about TransUnion

January 8th, 2018 | Author:
h

[T]ransUnion is one of the three credit bureaus which stores information about consumers and their credit history. It provides this information to creditors and to consumers. TransUnion was founded in 1968, and it now has more than 200 offices through the US and the world. How TransUnion is Different TransUnion is similar to the other […]

Continue Reading »

What You Should Know about Equifax

January 5th, 2018 | Author:
h

[E]quifax is one of the three major credit reporting agencies which provides information used on your credit report. It has a credit score which will impact your ability to get approved for new credit. All of these agencies aren’t the same, so here is some information you should know about Equifax. Equifax is headquartered out […]

Continue Reading »