Are you a 'revolver' or 'transactor' - and how does it affect your score?

By Marianne Curphey

How you manage your credit card is important - do you pay it off each month, or pay some and leave a balance? Lenders look at your credit management habits when you apply for more credit, but it's not the only factor that affects your credit score.

Transactors versus revolvers
Credit card companies divide customers into two distinct types: revolvers and transactors.

A revolver keeps a balance from month to month while paying only the minimum or slightly more than the minimum, but not the entire balance. A transactor, by contrast, does not hold an outstanding balance on their card after the monthly payment date. transactor-or-revolver

However, if you keep a balance on your card each month, this won't necessarily count against you. What can affect you is whether you pay your instalments on time, and how you are managing your money in other areas of your financial life. If you pay off your credit card each month but default on your mortgage, that will count against you.

James Jones, head of consumer affairs at Experian, says people are often surprised at the amount of information that is contained in a credit report.

"There is a large amount of information and a large number of organisations providing data, which we compile and put into the credit report," he says. "For most people who pay their bills on time, the information is likely to be positive."

What makes up a credit score?
Does your status as a transactor or revolver affect your credit score? The answer, in short, is not entirely.

Your credit report reflects your application details -- such as your name, address and other personal details -- your electoral roll information, any other names you use (called "aliases" on the report), and details of anyone you are financially connected to.

Your report will list "Credit Account Information", which shows details of your credit agreements with lenders. This covers mobile phone companies, credit cards, store cards, your mortgage and your current account.

It will also show anything that shows up on the Public Records, which includes any court judgments, debt relief orders, bankruptcies or individual voluntary arrangements.

Your credit score is made up of your repayment history, your utilisation ratio (the amount of credit you use compared to how much is available to you - this is where your status as a transactor or revolver comes in), the length of your credit history, recent inquiries and the types of credit products you have (credit cards, personal loans, mortgage, etc.).

It's not the case that you'll have a better rating if you have no other credit, Jones says. Lenders want to see that you can manage credit, so it will help you to have other accounts (as long as those accounts are in good standing. It also helps to have a variety of types of credit. This shows that you are responsible and can pay off your balances regularly. It only becomes a problem if you are late making payments, have a large amount of unused credit or are making multiple applications and are already at your credit limit.

On your report your credit cards may be listed in detail, showing balances and payments for the past 12 months. Lenders may also be able to see the lending terms, outstanding balance and monthly payments towards your mortgage, as well as the status of your current account.

To be safe, it's wise to check your credit report at least once a year (your full report, not just your score) from each of the credit bureaus, as each bureau may record slightly different information. You'll rest easy knowing what your score is, and you'll be able to spot any missing or incorrect information on your report, which can not only be vital to keeping your score in top shape, but to keeping fraudsters at bay, too.

See related: 7 small mistakes that can break your score, Clearing up confusion over credit reports, scores

Published: 20 July 2016