Building Credit Accounts

The category 'Types of Accounts' makes up 10% of your credit score. It doesn't seem like much, but every proactive step you take toward boosting your credit helps. Let's take a look at what types of accounts, including credit cards that will help best repair your credit.

Revolving accounts

With revolving accounts, balances are in a constant state of flux, and so are payments. A minimum payment is required each billing cycle, but beyond that, borrowers can revolve any remaining charges to the next billing cycle; with interest, of course. Here are some examples of revolving accounts:

Bank or Credit Union issued credit cards

You'll know these as Visa and MasterCard accounts. They are the most common and widely accepted credit cards since nearly all lending institutions are authorized to issue them to their customers.

Major credit cards

Examples of these are Discover and American Express which are issued by financial institutions, just not necessarily where you do your banking. These credit cards are widely marketed and accepted worldwide and will do a lot to repair your credit if used responsibly.

Retail cards

These cards are issued by stores. Retail cards are great credit repair credit cards because they are easy to get and can be used to build credit. Unlike major credit cards, however; you can only use a retail card at the store where it was issued.

Gas cards

Another good credit-building credit card. Gas cards are also easy to get and provide an excellent way to build credit. You simply charge your gas and then pay it off every month. Like retail cards, gas cards can only be used at the company that issued it.

Home Equity Lines of Credit

HELOCs aren't credit repair credit cards but are loans that allow you to borrow against the equity in your home. These accounts are very common since they are typically easy to obtain. Another perk, the interest on this type of revolving account is generally tax deductible.

Installment accounts

Unlike revolving accounts, installment accounts have a fixed payment for a fixed period of time. You are required to make a set payment that is the same each billing cycle until the loan is paid off. The interest you are charged is known as an APR (annual percentage rate). Examples of installment accounts are auto loans, mortgage loans, student loans, signature loans, and home equity loans.

Whether your credit accounts are revolving or installment, you will want to be sure that all creditors and lending institutions report account information to the bureaus. You will not be able to build or to repair your credit without having your positive behavior recorded. Do your homework before applying for credit cards and loans to be sure you are doing the most to maximize your credit repair and building opportunities.