Revolving credit is a line of credit where a borrower is not bound by a set number of payments to pay back the loan, but is instead free to use the funds whenever they are needed. For individuals, an example of revolving credit would be a credit card, where monthly payments are paid based on the amount of funds that have been used. For businesses, revolving credit is often used to cover fluctuating operational expenses.Know More
In a revolving credit system, borrowers are able to withdraw funds to a preset limit, and in exchange are charged interest on those funds which are not paid back each month. Available funds fluctuate depending on how much of the credit line has already been used, with payments due increasing as one gets closer to their credit limit, and decreasing as the balance is paid off.
Other than a required minimum monthly payment, there are no limitations on repaying a revolving credit account. Borrowers are able to make partial or full payments at any given time during the loan period, and paying more than the minimum is recommended as it helps to reduce the amount of interest paid. For corporate bank loans made to a business entity, there is also a fee that may be charged on any unused funds in the credit line.Learn more about Credit & Lending
A direct-lender installment loan is one where repayment is required in a predetermined number of equal payments, and the borrower and lender deal together directly rather than through a third party, such as a mortgage broker. Mortgages that are not issued through a third party are examples of direct-lender installment loans. There is no middle-man, and equal payments are typically required on a monthly basis for 30 years.Full Answer >
The issue number of a credit card is an additional set of numbers found at the end of the account number, and is used to allow for changes that may be needed if the card is lost or stolen. The issue digits are part of the full account number.Full Answer >
An excellent credit score usually ranks above 740, indicating that the borrower makes consistent, on-time payments. People with high credit scores usually have a total debt balance that is significantly smaller than their available credit, which is viewed as evidence of responsible debt management.Full Answer >
To repair bad credit, fix any errors on your credit report, set up automatic payments and decrease your debt. Making timely payments and being patient are helpful, but credit counseling can be a valuable tool if you have trouble staying organized.Full Answer >