What are the two main types of credit?

The two main types of credit are revolving credit and installment credit. Revolving credit allows borrowers to access a fixed amount of credit repeatedly as long as they make timely payments, such as with credit cards. This type of credit provides flexibility as borrowers can utilize their available credit up to a limit and pay it down over time. In contrast, installment credit involves borrowing a specific amount of money and repaying it in fixed installments over a predetermined period, such as with car loans or mortgages.

While secured credit and unsecured credit, as mentioned in the other choice, are important distinctions within the credit landscape, they don't directly categorize credit types in the way revolving and installment do. Secured credit involves collateral backing the loan, which can reduce the lender's risk, whereas unsecured credit does not require collateral. However, they aren't the main classifications of credit.

Government loans and private loans, as well as consumer credit and business credit, refer to specific sources or purposes of credit rather than the fundamental types of credit repayment structures. Understanding the two main types, revolving and installment credit, is essential for managing personal finances and assessing borrowing options effectively.