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What Is a Lack of Revolving Accounts?

Last Updated: March 4, 2024
3 min read

Key points:

  1. Revolving accounts are credit accounts that you can borrow against multiple times, such as credit cards.

  2. A lack of revolving accounts may lower your credit score.

  3. Getting a credit card will add a revolving account to your credit report.

Your credit score depends on the information in your credit report, and there are many factors that could help or hurt your credit score. These factors don’t tell you whether you have a good or bad credit score, just whether something is impacting your score. When you check your score, you may see a list of the factors that are impacting your score the most. One factor might be a “Lack of recent revolving account information,” or something similarly worded.

If you see that a lack of revolving accounts is a factor impacting your credit score, opening and responsibly using a revolving account, like a credit card, could help your credit score. 

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Comparing revolving credit with installment loans

According to the Federal Reserve, revolving and installment accounts are the two types of credit accounts that may appear on your credit report

  • Installment loans: These are loans that have a predetermined repayment period that you pay off with regular (i.e., installment) payments. Examples of installment credit include auto loans, mortgages, student loans, and personal loans.
  • Revolving credit accounts: These are credit lines that you can borrow against multiple times. Common examples include credit cards, personal lines of credit, and home equity lines of credit.

Both installment loans and revolving credit accounts can impact your credit score, according to the Fair Isaac Corporation (FICO). For example, your payment history with both types of accounts can be important.

Additionally, the portion of your installment loan debt that you’ve paid can affect your score. However, the portion of your revolving accounts’ credit limits that you’re using—called your credit utilization rate—is a separate scoring factor. Only using a small portion of your account’s credit limit is typically better for your credit score, according to the Consumer Financial Protection Bureau. 

Can a lack of revolving accounts impact your credit?

Having a revolving account won’t automatically give you a better credit score. But having a mix of installment and revolving credit accounts may have a positive influence on your credit score based on info from the Federal Deposit Insurance Corporation (FDIC). As a result, the lack of revolving credit accounts could also impact on your credit score.

Also, unlike installment loans, you have control over how much you charge and pay each month with your credit card. Opening a credit card, avoiding high balances, and paying the bills on time can help show lenders that you can responsibly manage a credit line.

Did you know?

With Discover’s pre-approval tool, you can see your eligibility for any Discover credit card. You can then choose your best option and submit an application. Keep in mind, submitting an application will result in a hard inquiry.

How many revolving credit accounts do you need?

Even one revolving account that you regularly use may be enough. Opening multiple accounts might impact your credit score, but it depends on the entirety of your credit report and the credit score model. Having a mix of revolving accounts and installment accounts can have a positive influence on your credit score, but it’s also important not to have more credit accounts than you can manage responsibly.

How to add revolving accounts to your credit history

If you don’t have any revolving accounts, the easiest way to get started could be to open a credit card. But when you apply for a credit card, the resulting hard inquiry can impact your credit score—even if you’re not approved.

A lack of revolving credit could impact your credit score, but whether you should add a revolving credit account would depend on your overall financial situation. If you can successfully manage a new revolving credit account, then it might be beneficial to have one.

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  1. There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.

  2. FICO® Credit Score Terms: FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

    Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.


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