Revolving credit refers to accounts that have a line amount that you can borrow against as needed, and as you pay it back, it becomes available to borrow again. This is how credit cards work, as well as home equity lines of credit and personal lines of credit. Credit cards and revolving lines of credit are convenient ways to pay for unexpected expenses. Let’s look at how revolving debt affects your credit.
Handling Revolving Credit
How you handle revolving credit can either help or hurt your credit. If you’re just getting started with a credit history, or if you’re rebuilding after previous financial difficulties, having a revolving account can help you begin to build a positive payment history, as long as you make your payments on time.
Whenever you borrow against a revolving account, it’s a good idea to have a plan on how and when it will be paid back and to pay it off before you borrow against the line again if possible. If you’re not able to pay the balance off in full right away, interest is charged on the balance you carry, and you’re expected to make a minimum payment each month. The longer you carry the balance, the more you’ll pay in interest.
Revolving Credit and Your Credit Score
Consistently making your payments on time is one of the most important parts of your credit score. Other ways revolving credit can affect your credit score include:
Protecting Your Credit
Check your credit report at least once a year to make sure that the information on it is accurate. Misinformation can affect your ability to borrow money in the future at reasonable rates. If you find errors on your credit report, let Dovly help you dispute them. Dovly is an automated credit repair engine that tracks and manages credit. Try it risk-free with our free membership tier.