Credit Card | Closed End Credit Impacts
Since, we discussed about the closed-end-credit in our previous article. And you are cognizant with what it is but let’s take a peek at its payment terms and how it can impact your credit.
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Whenever you borrow money, you will have to repay it along with the interest. When it comes to borrow amount of money with closed-end-credit. The interest rate is fixed for the entire time till your credit is perfect. Sometimes, variable interest rate may apply to the closed-end-credit. It usually has a lower interest rate as compared to the open-end-credit. Which is a blessing if you are planning for long term borrowing. This will give you advantage of availing the amount at a lower interest rate.
The procedure is like this that you will have to make payment monthly. The payment should be made within a due date and this will continue until the balance is paid off. A part of the payment will be added to the balance while the remaining one will be added towards interest. In case, you are not able to make payments within due date, then, late fee payment charges will be applied and the credit bureaus will receive the late payment notification if it is late for more than 30 days.
You will be put in a category, “default” if you are late for 90-180 days. Thus, be responsible enough to make payments on time. If this condition appears, the lender can ask for the entire balance due and you will not be given any option at that time to make monthly payments. So, do remember the dates and make the minimum payment within due date .
Impacts Of Closed-end-Credit On your Credit
Closed-end-Credit has similar impact on your credit as other credit accounts. If you have been making payments on time and the report is sent to the credit bureaus then your timely payments will augment your credit score.
While, if you have been making late payments, then, it will be impacting your credit score in a bad way. Your credit score may drop too. Since, you are repaying the amount thus, your account report or status will be sent to the credit bureaus by the creditor to keep check on your records. But once, you pay the entire balance, then your account will be closed and it will stay on your credit report for 10 years or so on.
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