Page 52 - Winning The Credit Game Bundle (CK Patrick)

40 THE CREDIT GAME

INSTALLMENT LOANS

Installment loans are loans where you pay a fixed amount to a creditor
each month. This demonstrates to banks and credit card companies
that you are capable of paying significant amounts of money back over
a long period of time. It shows that you are able to plan ahead and
borrow only what you can pay back, even many months or years in
advance.
A history of successfully paying off installment loans shows credi-
tors that it is safe to lend you large amounts of money, because you
won’t let them down when it comes to repayment.
You may recognize this model from SelfLender.com in the previous
chapter. You agreeing to pay a fixed amount to your savings account
each month—and then actually doing it—will show credit bureaus that
have this skill. Paying off a student loan or other type of loan with
installment payments would show them the same thing, but with Self-
Lender.com you don’t pay interest on the money you “borrowed” and
you are not in danger of showing losses on your scorecard if you
can’t pay.
Still, you are building and demonstrating the same kind of skill set
necessary to pay off a student loan, home, car, or business loan. This
means that lenders will be more likely to approve you for such loans in
the future. The more you can demonstrate this skill through a long
credit history or paying off more than one loan each month success-
fully, the more likely they are to offer you excellent interest rates and
loan large amounts.

REVOLVING DEBT

Revolving debt refers to debts that change each month or are flexible.
A common example of a revolving debt is a credit card, where you
have the freedom to borrow and pay back as little as $0 or as much as
thousands of dollars each month.
If loans show lenders that you have the skills of planning ahead
and following through on long-term commitments, revolving debt