But another important factor in understanding one’s own credit history report is the letter to the immediate left of those 1 to 9 numbers. Most commonly you will see (capital) letters R or I.

Letter R stands for a “Revolving” credit account and letter I stands for an “Installment” credit account.

Example of a revolving credit account would be a credit card. One could have a $5,000 Visa or Mastercard. On day one of the month your balance owing on it maybe $0. By day four you may have gone grocery shopping and have balance of $125 owing on it. By day fifteen of the month you may have gone on vacation and spent an additional $2,000. And by day 30 at the end of the month you decide to pay off all of the total amount owing – or – some of the balance owing – or – just the minimum payment due. So the balance owing at any given point of each month can be a revolving amount! This kind of account, based on the person’s repayment pattern shown above, could demonstrate a customer who at any given moment of the month may have a different financial situation.

Example of an installment credit account would be something similar to a car loan payment. It is a set amount each and every month. The payment does not change. Future creditors looking at an individual’s credit history tend to look more favourably toward these installment accounts. The reason usually is because it demonstrates a “no-drama” person. It shows that no matter what is going on in that person’s life on any given month, they make sure to have enough money set aside for their basic car payment. And at the end of the day, all creditors want is a client who is responsible and they don’t have to chase them back for a basic payment.

The above mentioned example is a demonstration as to how a simple car financing, can IMPROVE your car, and with that IMPROVE your credit, and with that IMPROVE the quality of your life!