In this tough economy it seems that everyone is using more credit just to get by. Did you know that there are different types of credit solutions? Do you know if your credit score is good or substandard?

After reading this article you should be able to tell the difference between revolving credit, charge credit, and installment credit. You will also be able to determine what a good credit score is, which determines everything from interest rates on a car loan to whether you will be able to refinance your home or not. This article will also briefly touch upon credit card debt solutions (how to consolidate credit card debt). This information will hopefully give you some better insight into making the best credit choice for yourself.

Revolving credit is a credit solution that is characterized by not having a set amount of payments. This is the most common type of credit and you would recognize this type most from credit cards. With revolving credit the borrower is able to take out funds up to an agreed upon limit. The credit may be used over and over. The payment the borrower makes is based only on the amount he/she has withdrawn, plus interest of course. The borrower can choose to either make a minimum payment or, alternatively, pay the amount in full at anytime he/she so chooses.

Charge credit works a little bit differently than the typical credit card. This is because instead of using a revolving credit system like other companies, it uses a charge credit system. Under this system it is presumed that the borrower will pay the full amount that he/she borrows at the end of each and every month. For example, say a person using their American Express card to purchase a new HD T.V. This person would be required to pay the full amount they borrowed to purchase the T.V. one month from the date of the purchase.

Installment credit is different than revolving credit in that it has a fixed number of payments. Also, unlike revolving loans the credit can only be used once. Some examples of installment credit include: land loans, home construction loans, mortgages, some equity loans, home improvement loans, car loans, student loans, personal loans, and even vacation loans.

As you probably already know, the general rule of thumb when it comes to credit score is “the higher the better”. That being said it is important to note that there is not real set in stone industry standard. A person’s credit score can range anywhere from 350 on the low side to 850 on the high side. Every creditor or lender looks at your credit score a bit differently. This is why it’s nearly impossible to give an exact credit score that is considered good. However, if you have a credit score about 690 you are most likely in good shape. Scores that are below 620 are normally called “sub-prime”, meaning they could be better.

Credit card debt solutions is a very hot topic. It seems like everyone knows at least 3 other people that are up to their eyes in debt and want to consolidate credit card debt now. Many people choose to go the route of a credit counseling services such as Credit Solutions of America or National Credit Solutions. While I have not personally used any credit counseling service, I would warn anyone that is thinking about doing so to stay on your toes and be very careful. The best way to stay out of credit card debt is to simply live within your means. If you know you cannot afford something, do not purchase it!