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Finance/Revolving
Revolving credit rating will not be downgraded today. I will post about application, cancellation, and impact.
The credit card revolving system is a method in which only a portion of the credit card payment amount is paid this month and the remaining payment amount is carried over to the next month. The correct name is “Partial Payment Amount Carryover Agreement.”
The revolving contract payment ratio can be freely adjusted within the range of 10% to 100%. If you set it at 10%, if your credit card payment this month is 1 million won, only 100,000 won will be paid and the remaining 900,000 won will be carried over to the next month.
The payment ratio can be freely adjusted between 10% and 100%. If you do not want to carry over the payment amount, set it to 100% and all card bills will be paid at once without carrying over.
In the case of the card revolving service, if it is difficult to pay the card bill on the billing date, it can be useful in times of emergency because it can prevent delinquency by adjusting the payment ratio. However, if you continuously carry over the card value, the card value and interest will accumulate. This can be a huge burden, so it is best to use it only for short periods of time and when it is urgent.
In particular, in the case of this service, it is applied differently depending on the individual, but the interest rate can be quite high, up to 20% per year, so if you are using it because you have difficulty paying your credit card bill, it may be advantageous in terms of interest to take out a loan and repay it.
This is a service that requires planned use rather than just using it because it is convenient.
Credit rating for revolving application: It is said that the ‘fact of receiving revolving’ itself does not affect credit rating. This is because credit rating agencies do not use this as evidence when evaluating an individual’s credit.
Credit rating agencies usually evaluate an individual’s credit through two steps.
The first process is the model development stage. It is a procedure to classify individuals, such as those with past delinquency records and those without, based on various criteria, and then create a so-called ‘evaluation checklist’ appropriate for each group. The checklist contains a variety of items, including whether or not to use a loan, and the content varies from group to group. A credit rating agency evaluates an individual’s credit based on this checklist.
As mentioned above, ‘revolving’ is not included in the evaluation items. This is because meaningful statistics have not yet been accumulated to use as a basis for calculation. However, there is a high probability that using revolving will have a negative impact on your credit rating.
What credit rating agencies focus on most when evaluating credit is an individual’s ability to repay. If you make frequent payments with a real credit card and pay it off in a lump sum, you can get a positive score on your credit score. On the other hand, if you make a payment with a credit card and incur an ‘unpaid amount’, which is money that has not yet been repaid, your credit rating will be negatively affected. This is because a question mark is placed on the ability to repay. Based on this logic, it is said that using installment payments will have a somewhat negative effect on credit evaluation.
If you look at the website of the credit card company you use, there is a category related to revolving.
Cancellation of revolving is simple.
If there is any amount carried over, you will of course have to pay a fee.
The fee is calculated as balance
There is no major disadvantage to using credit card revolving. However, you have to pay interest, and it may affect your revolving credit score.
This is a very good product for preventing overdue credit card payments, but spending too much relative to your financial ability and indiscriminately carrying over is a very bad habit. It has a similar structure to credit card rotation.
Credit card revolving will not affect your credit rating, but there is a high probability that it will be lowered. Revolving once or twice will not affect your credit rating, but if it happens more often, it may have an impact.
If you don’t have the credit card payment due, compare revolving or loans carefully and pay it back well without being late.
As mentioned above, revolving credit rating will not be lowered. This concludes the post on application, cancellation, and impact.
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