No doubt, your credit history plays a crucial part in your financial life. Having an impressive credit history can improve your chances of big savings, and getting better loan rates. Of course, a strong credit history can create many financial opportunities for you. However, if your credit history is in a sorry state, claiming some financial benefits become a big challenge. In the next couple of paragraphs we will highlight some of the benefits of establishing positive revolving credit for raising your credit score. Before we discuss the importance of establishing positive revolving credit, let’s quickly explain “revolving credit” means.
What is Revolving Credit?
Revolving Credit simply refers to credit that is continually used. Some common examples of revolving credit include credit cards, home equity line of credit and business line of credit. Revolving credit gives you the privilege to continue borrowing until you reach the limit of your credit line. As long as you keep making payments, you’ll be able to continue borrowing without issues.
The Advantages of Establishing Positive Revolving Credit
Some of the great advantages of establishing positive resolving credit are:
1. Always available to you – positive revolving credit is always available to you as long as you maintain your balance.
2. No need to reapply each time you need credit – with positive revolving credit, you can continue to access a loan without undergoing the stress of completing the application process.
3. Revolving credit provides a maximum credit limit in which a user can make charges up to. Once the user makes a payment, the available credit becomes free for you to borrow.
4. Revolving credit also makes it possible for you to pay the minimum.
5. Revolving credit can serve many purposes such as cash flow, startups, and day-to-day operations.
While revolving credit plays important roles in raising credit score, it is advisable for users to use only what they need and save the rest for when the need might arise. Be mindful and try to use less than 20% of this line of credit, as your credit score is negatively affected when you spend a higher percentage.