| When building a complete credit file it's important to | | | | 4. Student Loans - These can vary quite a bit, based |
| understand exactly what are the different types of | | | | on how much you owe. |
| credit. What we're going to cover what the different | | | | What is a Credit Card? |
| types of credit are, and a little bit of how they affect | | | | A credit card, otherwise known as a revolving loan, is |
| your credit score. Understanding this will better help | | | | a type of loan may or may not be secured against a |
| you with your goals. | | | | property. These types of loans allow the owner to |
| In the overall sense of credit, there is two specific kinds | | | | borrow and repay money at his or her leisure up to |
| of accounts that make up a credit score. | | | | the maximum credit limit. Periodic payments of at least |
| 1. Installment Loans | | | | accumulated interest are required but the loan is fully |
| 2. Revolving Loans or Credit Cards (we're going to call | | | | open. These types of accounts may be paid out in |
| them credit cards in this article) | | | | whole or in part at any time and, if there is still money |
| What is an Installment Loan? | | | | available under the loan ceiling, the borrower may take |
| What is an Installment Loan? | | | | more money for her use. |
| An installment loan is a loan that is repaid over time | | | | What are the Different Types of Credit Cards? |
| with a set number of scheduled payments. The term | | | | There are only two different types of credit cards that |
| of loan may be as little as a few months and as long | | | | I'm aware of. You have secured and unsecured credit |
| as 30 years. What that means is that if you get an | | | | cards. I'll explain about these: |
| installment loan for $20,000 and your payment is $350 | | | | 1. Unsecured Credit Card - Quite simply, these are by |
| a month, you'd end up making payments of $350 a | | | | far the most important type of credit to have, and |
| month until the loan is paid off. Most of your interest will | | | | understand. They hold the real key to your credit |
| be paid up front on these kinds of loans. | | | | score. To put it simply the more unsecured credit, with |
| What are the Different Types of Installment Loans? | | | | low balances you have... the better it will be for your |
| There are several kinds of installment loans. Some of | | | | overall credit score. These can at times be a little bit |
| these will range from a few months of repayment, up | | | | more difficult to qualify for, especially if you have little |
| to several years. The different kinds of installment | | | | credit established or a bad credit history. The reason |
| loans are as follows: | | | | for this is because they are not using any type of |
| 1. Mortgage Loans - Typically from 10-30 years of | | | | collateral at all to secure the money they will be lending |
| repayment. They are some of the safest loans | | | | you. |
| because the house will be used as collateral if | | | | 2. Secured Credit Card - These types of credit cards, |
| someone defaults on their payment. | | | | are usually used with people that have little or no credit |
| 2. Automobile Loans - Typically from 2-6 years of | | | | established. These don't hold quite as much weight as |
| repayment. Interest rates will vary greatly, based on | | | | an unsecured credit card, but are still effective at |
| credit. If someone has a bad credit score, they will end | | | | building a credit file. They will typically require a cash |
| up paying extremely high interest rates up to 25%+. | | | | deposit that will secure the credit card to protect |
| 3. Personal Loans - These can be very short | | | | against a default of payments. Some secured credit |
| repayment periods such as 2-12 months. These can | | | | cards will also require an application fee that is |
| be a little difficult to get approved for if you don't have | | | | separate from the cash deposit to secure the card. |
| any collateral to give to the lending institution. | | | | |