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There are three types of credit accounts

The different types of credit

CREDIT TYpes

Revolving Credit

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Revolving credit is a line of credit that you can borrow from freely but that has a cap, known as a credit limit, on how much can be used at any given time. It typically refers to credit cards and home equity lines of credit (HELOCs). It usually requires monthly payments and interest charges if you carry a balance.

Installment Credit

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Installment credit refers to loan for a set amount of money with a fixed, regularly occurring repayment schedule that will ultimately paid-off. It includes student loans, mortgages, auto loans, personal loans, etc. This type of credit is fairly common.

Open Credit

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Open credit refers to accounts that you can borrow from up to a maximum amount (like a credit card) but which must also be paid back in full each month. Open credit is generally associated with charge cards — not to be confused with the credit cards used for revolving credit.