No. of Recommendations: 3
If I needed a new major appliance, or a new car, I'd consider financing. Especially, if it was no interest, like you did. At that point, it seems like it is both good for the credit score and beneficial for personal finances.

Does that type of financing show up as an "Installment Loan", or if they do it by store credit card, as "Revolving Credit"?


Something that requires a fixed monthly payment and is scheduled to be paid off in a specified time period ought to show up as an installment loan. Something that is open-ended where you pick how much to pay, subject to a minimum, ought to show up as revolving credit. The typical new car loan should show as an installment loan. The typical no interest for X months on a store card should show up as revolving credit. If it's a hybrid somewhere in the middle, your guess is as good as mine.

I'm not focused on getting a perfect FICO score. I was just sort of curious.

Curiosity is normal, and not a bad thing, however . . .

I have no statistically valid study to rely on, but in 10 years of off and on watching message boards I've noticed that the people who say they have very high FICO scores tend to be focused on what's the best thing to do for their finances, blind to what it does to the credit score. Certainly I never knew my credit score until the message boards made me curious; I only knew that if I wanted to buy a car, I could borrow more money than I wanted to borrow at the most favorable rate the lender offered.

Later, I spent some time with zero percent offers earning interest on money that wasn't mine; that stopped being worth my time when interest rates started going way low in 2008 or so. Not that I'd pass up a zero percent offer that dropped into my lap for something I was going to buy anyway; but the return isn't enough to go out of my way to create such a situation right now.

And yes, the free reports about my credit score say it's hurt by lack of a first mortgage and lack of installment loans. I really don't care. I can still borrow more money than I want to at favorable rates, if I find a situation where borrowing makes sense.

Right now, my borrowing is limited to a month of float on credit cards for current expenses. That hasn't seemed to particularly hurt my credit score, even though the mortgage and installment loans have all aged off the report.

No, the float doesn't earn me enough interest to sneeze at; but there is the cash back from the purchases making it worth my while to use the cards as long as I don't succumb to the incentive to spend more.

Patzer
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