Revolving Credit: What It Is and How It Works

What Is Revolving Credit?

By Kristi Waterworth – Updated Dec 12, 2024 at 2:17 PM

Key Points

Revolving credit allows repeated borrowing within a set limit, offering flexible financing.
Balancing usage of revolving credit under 30% optimizes credit score impact.
Investors must understand revolving vs. installment loans to evaluate financial strategies.

Revolving credit is just one type of credit available to both consumer and business borrowers. Knowing what revolving credit is and how it works can help you make better financial decisions and strategize to improve your credit over the longer term. It also helps to know what you're buying into when you're investing in banks and other financial institutions that lend money.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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