![]() ![]() The second type of credit is when a lender allows you to borrow a specific amount of money with a set amount and payment schedule over an agreed amount of time. A partial payment might also include additional interest for carrying a balance into the following month. → If you make a partial payment of $300 on the due date, the line of credit increases to a $700 limit for the next month. → If you make a full payment of $800 on the due date, the line of credit increases back to the original $1,000 limit. You now have $200 left of that $1,000 credit. The first month, you charge $800 of purchases to the credit card. Examples of revolving credit: – Credit card – Home equity line of credit (HELOC) – Personal line of creditĮxample of how revolving credit works: You apply for a credit card and are given a $1,000 limit. This line of credit continues to stay open as long as on-time minimum payments are made. This type of credit is when a lender allows you to repeatedly borrow money up to a set limit while paying back over time. One type of credit doesn’t fit all situations, so we’re diving in to cover what type of credit to use for what financial event, along with how potential lenders rate your “creditworthiness.” Three types of credit are used to calculate your credit score. Credit is when a person borrows a set amount of money paid back over time, usually including interest. ![]()
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