A revolving account is an account where you are given a certain credit limit and you make monthly payments based on how much you borrowed that month. You can access all or some of your credit line whenever you choose. The difference between a revolving account and an installment account is that on an installment account you pay one set monthly payment every month until the debt is paid off. On a revolving account you can pay part or all of your balance monthly and the monthly payments change depending on your balance.

How Can It Affect My Credit Score?

When having an revolving account such as a credit card it is important to not use too much of your available limit. Most people in the credit business agree that using 30% of your credit line is the magic number. It shows lenders you can manage your credit line responsibly, of course you would need to pay your monthly payment s on time every month otherwise your score will go down drastically. As you can see having an revolving account can do wonders for your credit or destroy it. It all depends on how you handle it, for example owing $10,000 spaced out over a few cards looks better than having a $10,000 balance on one card with a $12,000 limit.

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There are many different types of loans
, either secured or unsecured but they are all a type of debt. A secured loan is a type of loan in which collateral is involved, and the borrower must offer personal assets (such as a car or home) if they do not repay the amount owed. Secured loans are mortgages and auto loans in most cases, because they can always take back the property if not paid. An unsecured loan is a type of loan where the person does not have to offer collateral and usually have high interest rates. An example of an unsecured loan would be a loan for credit card debt, a personal loan, or a corporate bond.

How Does A Loan Affect My Credit Score?

If paid on time loans can look great on your credit report. It shows diversity in your credit report that is needed to increast your credit score. However, if it is not paid on time it can look very bad on your credit report making a lot of consumers efforts to improve their credit score counter-productive. The initial effect may be negative when taking on a new loan but after 12 months or so of faithfully paying on time your credit score will go up.

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Repossession is when a lender takes back the property you have purchased, leased, or put up for collateral. The procedure is usually followed by the terms of the contract where the seller agrees to allow the lender to take back the product after the agreed number of days of late payments as set forth in the contract. The contract usually details additional fees the buyer incurs from the cost of repossession and the depreciated value.

What the lenders do not want

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A judgment is filed by a lawyer basically suing you for the money owed to the creditor.

Dealing with a debt collector can be one of life’s most stressful experiences. Harassing calls, threats, and use of obscene language can drive you to the edge. What’s worse, a collector may contact your employer, family or neighbors. You may even be hounded to pay a debt that is not rightfully yours. Sure, collection agencies have a job to do. Even so, there are limits on how far a debt collector can go.

A judgment will affect your credit score negatively. If it is unsatisfied, it will probably affect it more than if you satisfy the judgment by paying it. A judgment allows the company to get a lien against titled property that you own, like a car or a house. You cannot get clear title to the car or the house so you can sell them until the judgment is paid off. A judgment allows a company to pursue the garnishment of your wages and your assets, like bank accounts. In addition, a judgment is a public record on your credit report.

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If you do not pay State or Federal taxes or pay a debt owed to a creditor, they can make a claim against your property. This particular claim is called a tax lien, and it is a horrible situation altogether. The property they can claim could either be your home or automobile, and they do this to secure equity in the property for a balance owed. The government or creditor can also seize the property and auction it for unpaid taxes or funds.

A lien isn’t that big of a deal is it?

Basically, a lien is a guarantee that the creditor gets paid before anything else happens. If you want to pay off your mortgage or have money left over when you move, think again. Everything comes second to your lien because of the contract signed or forced upon you. However, you still have to pay off your mortgage in addition to your lien, so there is a possibility you will be in debt and your credit will be damaged from the mortgage and the lien!

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Late payments that show up on your credit report
hurt your credit score to varying degrees. Even though it seems that all late payments are the same, this is not true. There is one late payment in particular that could ruin your credit for a very long time! Whether it is a late rent payment, a late credit card payment, or a late bill payment, if it is 90 days or above it will destroy your credit score. Not only will you have record of this on your credit score, but a lot of the times creditors will charge late payment fees or late fees, and it ends up costing you more money!

In all situations circumstances arise and a 30 day or even 60 day late payment happens, and creditors know this. Most of the time, if you make your payments on time after the delinquency occurs your credit will go back to normal a short time after the incident is cleared up. A 90 day late payment affects your credit score almost the same as a repossessed auto loan, a collection or charge off account, or even a bankruptcy! This is why it is so important to make your payments on time, and keep track of your credit score. However, not all 30, 60, 90, 120, or 150 days late payments are reported accurately. In that case, it is best to seek credit repair to dispute those items so that they can be removed from your credit report.

As many as 79% of credit reports are reported inaccurately or incorrectly. Most of the information contained in your credit report is only allowed on your credit report for 7 years, and if it is a bankruptcy then it is allowed for 10 years. However, there is help. You can request your credit report for free once a year at www.annualcreditreport.com. Annualcreditreport.com works with the government to insure the credit reporting agencies are following the proper laws. If you feel that you have information that is incorrectly showing on your credit report, then it is your legal right to dispute the information on your credit report.

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An installment account is an account that you pay a pre-set monthly payment and pay off the balance over time. These are for accounts such as auto loans, mortgages, student loans or personal loans. They have fixed terms where you make regular payments on the balance.

What are the benefits of installment accounts?

The benefit of having an installment account over arevolving account is that it makes it much easier for the consumer to work out a monthly budget. When they have a set monthly payment that they know is going to be the same every single month, they can work other monthly expenses around that number. Installment accounts are almost always better than revolving accounts when purchasing big ticket items because they offer competitive interest rates. Installment loans are also great for building a credit history. A mortgage or auto loan looks great on your credit report when paid on time. If you are looking for less of a commitment for building your credit history, student or personal loans will also look favorably upon you when you faithfully make the monthly payments on time every month.

How does an installment account affect my credit score?

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A mortgage is a contract loan a person takes out to purchase their home, and is one of the most significant trade lines on a credit report. When a lender looks at how a person paid their mortgage, they look at how many late payments there were and if the home went into foreclosure. If a home goes into foreclosure, it shows that the person was not paying their mortgage or could not afford their mortgage.

How damaging is a foreclosure to your credit report?

A foreclosure is the worst record to have on a credit report, and can remain on your credit report for a very long time. In order to keep a foreclosure from appearing on your credit history there are 2 options. Try to make timely payments or if the foreclosure item is reported incorrectly on your credit report it would be best to dispute it to have it removed from your credit report. Many times information is reported inaccurately on a credit report.

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A collection account is an account sent from a creditor to an outside agency or its own collection agency in order to collect an unpaid debt. After an account is charged off, it usually will go into collections, because they still want to receive the money for the debt. The account will no longer be reported as a charge off, but it will now be reported as a collection account.

Always pay your collection or it could mean no future credit!

It is always better to pay a charge off or collection account rather than to leave it as unpaid. On a credit report there are “paid collections” and “unpaid collections.” When disputing information on your credit report, if you have documentation that you have paid a collection or charge off account, it should be stated on your credit report. Unfortunately, most lenders will reject people for having any type of charge off or collection account on their credit report. But, if the collection account is paid, creditors will see this and it can possibly lead to an increase in your credit score.

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