Difference between installment vs. revolving

[Anonymous]

What's the difference between the two? I have 2 credit cards- with low limits. I am trying to improve my credit. Hopefully this time next year, I will qualify for a home and have enough $ saved up for a big down payment. 

[Anonymous]

Nobody????

[Anonymous]

There are several kinds of installment loans you can get but the simplest  example of an installment loan would be a car loan.

You have a fixed beginning balance and you pay it down in "installments" thus the term installment loan.

[Anonymous]

Oh!!!! Ok, makes sense. So then my student loan would be an instalment..  Thanks!

[RobertEG]

Revolving credit

You apply for and receive a line of credit that sets a pre-approved limit upon which you can borrow.  For credit cards, this is your credit limit.

Your balance at any time, along with your payments, thus "revolve" around your discretionay use of your approved limit.

Installment credit

The contract puts a set amount of $ in your hand, with set monthly repayments in installments for the peirod set forth in the loan.

More credit requires a new contract.

[Anonymous]

I would like to know ... As far as rebuilding credit ..... Is it wise to try to have both an installment loan and revolving credit? Or is it better to just have revolving credit alone?

The way mine worked out, im starting with both. Secured cards and fingerhut freshstart.

[MarineVietVet]

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@Anonymous wrote:

I would like to know ... As far as rebuilding credit ..... Is it wise to try to have both an installment loan and revolving credit? Or is it better to just have revolving credit alone?

The way mine worked out, im starting with both. Secured cards and fingerhut freshstart.

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Under the older models a credit mix wasn't as critical but it seems from more and more stories that FICO 08 is much more sensitive to the lack of installment loans.

So right now I'd say it is better to have both but I wouldn't recommend someone get an installment they don't need just to have a better credit mix.

But everyone has to decide that on their own.

[Anonymous]

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@Anonymous wrote:

I would like to know ... As far as rebuilding credit ..... Is it wise to try to have both an installment loan and revolving credit? Or is it better to just have revolving credit alone?

The way mine worked out, im starting with both. Secured cards and fingerhut freshstart.

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Adding an installment loan gave me around 15-20 extra points more or less after 6 months.  Not 100% accurate but my guess after my score jumped after my 6th month of having the installment loan.   And it removed the "LACK OF INSTALMENT LOAN" reason (for not having a higher score) on my credit report 

[Anonymous]

This... a very good question! Thanks for asking!