How Different Types Of Credit Can Boost Your Credit Score

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A person's credit score could range from 300 to 900, and the higher the score, the more financially able a person is considered to be.

What is Credit and Credit Score

Understanding Credit -
Credit is the ability to borrow money or access goods or services with the understanding that the borrower will pay later. Creditors (including Lenders, merchants and service providers) grant credit to individuals or companies based on their confidence that the borrower can be trusted to pay back what they have borrowed, along with any finance charges that may apply.

Understanding Credit Scores -
These help lenders in determining whether or not a loan application can be approved and determining what loan terms need to be offered to a borrower. The score is generated by an algorithm using information from the individual’s credit reports, which summarize his or her borrowing history.

Types of Credit

There are three main categories of credit generally available for borrowers:

Revolving Credit

This is one of the most common types of credits. It is a line of credit that has no cap ...
... on borrowing or how much can be used at any given time. It includes credit cards and home equity lines of credit and it generally requires monthly payments and interest charges if the borrower carries a balance.
Under revolving credit, the credit limit does not change when the borrower makes payments on the revolving credit account. A borrower can return to the account to borrow more money as often as he or she wants, as long as the maximum limit is not exceeded.

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