Types of Credit and What They’re For There are three different types of credit, and to achieve the highest credit score possible, consumers need to have the proper mix on their credit repair. Here’s more information about them and what they’re used for.
Open Credit This type of credit generally doesn’t appear on a consumer’s credit report. Open credit mainly consists of utility bills like cable, electric, gas, or water. However, if a consumer doesn’t pay these bills, it may end up on their credit report if their debt gets sold to a debt collection agency.
Revolving Credit Credit cards are the most common type of revolving credit accounts. They consist of a credit limit that the consumer can borrow against. Most credit cards don’t require that the individual has to pay the total amount back quickly as they usually only have to make a minimum payment each month that’s just a fraction of the balance.
Installment Loans This type of credit often involves a large sum of money for an asset or educational purposes that can be paid back over time. Installment loans include auto loans, student loans, and mortgages. It can take years for an individual to pay off an installment loan.
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