Revolving Credit is a credit line you can borrow against and repay over and over again for example a credit card. In most cases it can be a flexible way to borrow, but it’s not ideal for every purchase. This is how revolving credit works and check whether it’s a good choice for your financial plans.
Does Revolving Credit Affect Your Credit Score?
Whenever you spend on credit, it can have an impact on your FICO credit score, the score most commonly used by lenders. How you handle that credit will determine if the impact is positive or negative.
Revolving Credit can be Good.
Any credit card can help manage day to day expenses before your next paycheck. You also get rewards credit cards, that puts money back in your pocket with purchases.
Managing your credit buy keeping the balances low. With a credit card or other types of credit, you’re able to use up to hundred percent of the credit extended to you. But it doesn’t mean you should. Maxing out your credit will lower your credit score. Keeping your credit utilization low will boost you credit score. Another way to give your credit score a boost is to pay down the balance or simply increase your credit limit if you don’t have the money to pay the balance in full, but remember, the key is not to add more debt to your new, higher limit.
Revolving credit can have a positive or negative effect on your credit score. It all depends on how you use it.