Thursday, November 13, 2008

Installment Credit vs. Revolving Credit

Installment credit is based on a fix monthly payment such as am auto loan,student loan, or a mortgage loan, the difference is your payments are generally fixed so you must pay the same amount each month based on the amount of the loan and the interest rate. Being late on an installment loan can leave negative marks on your credit for a period of seven to ten years.

Revolving credit is usually in the form of credit cards, department store cards, and gas station cards, this type of credit has a pre-detemined interest rate and payments are basically whatever you want them to be with only a small monthly limit you must pay. Revolving credit accounts that become late pose a negative mark on your credit report on a monthly basis, it is important to pay at least the minimum amount due each month to maintain in good standing with the credit grantor although it is highly recommended that you always pay more than the minimum amount due monthly.

No comments: