These two types of credit affect your credit score differently. With revolving credit, it’s important to keep your credit utilization low-or, in other words, don’t use up too much of your credit limit. Borrowing usage will generally have a greater impact on your credit score than the debt you owe on an individual installment account. However, making timely and regular payments on your installment loan can also improve your credit score over time.
As we mentioned above, length of credit history accounts for 15% of your FICO score. If you’ve had accounts open for a long time, this will contribute to a favorable credit score. Even after the account is closed, FICO and other credit reporting activities take into consideration the type of account it was and how long you had it for.
However, finalized levels is excluded from the credit history after a certain amount of time. Closed accounts that recorded late payments will stay on your credit report for seven years, while accounts in good standing can http://tennesseepaydayloans.net/cities/morristown stay on your credit report for up to ten years.