Credit Bureaus Now Classify Consumers as Transactors or Revolvers
Are you a “transactor” or a “revolver”? That’s the question that all three credit bureaus are now asking when they assess credit.
TransUnion, Equifax and Experian have all added features to their credit reports that highlight what kind of credit card user you are. This could determine the kind of credit cards you qualify for in the future.
There are two categories of cardholders: transactors and revolvers. Transactors are people who use their credit cards and then pay their balances off before the end of their billing cycles. Revolvers are those who regularly maintain a balance on their cards that “revolves” from month to month.
Ezra Becker, vice president of research and consulting at TransUnion, noted that transactors are less apt to default on their payments than revolvers. This category of borrowers will likely have access to more credit cards and better lines of credit once companies start to look into the classification information.
“This is another tool we are giving to lenders to be able to manage risk. The idea is everyone should pay for the risk they present,” said Becker in an interview. “If you treat everyone the same, the low-risk people subsidize the high-risk people.”
If you were planning on racking up high credit card bills for Christmas this year, you may want to think again. Rather than paying off those bills sometime in 2014 and being categorized as a revolver, try for a January payoff to maintain your transactor status. How you pay your credit card bills now could impact your crediting options in the future.