First thing to know is that debt is not always bad, in fact you want to have debt in your credit report. The important things is knowing the difference between good and bad debt.
Good debt is going to help you tremendously in keeping and raising your credit score. A few good examples of good debt are auto loans or mortgage loans. When you make your payments on time and keep these “debts” in good standing they not only help increase your credit score but also gives establishing good payment history which is 35% of your entire credit score. The longer you have these accounts open it also helps you establish your length is credit history which accounts for another 15% of your credit score.
Credit cards can also fall into the good debt category, especially if you have had those accounts open for longer than 12 months with your payments made on time. The older the account is, in most cases the better it is helping you, of course so long as that account is in good standing meaning no late payments and a good debt ratio.
If any of these accounts begin to obtain late payments these accounts can quickly turn into bad debt especially should they go to collections or repossession. One single late payment can not only turn your good debt to bad debt but also drop your credit score tremendously.
It is good to have good debt and a variety of it 1-2 installment loans such an auto, mortgage, student loan, personal loan, also 3-4 revolving accounts such as credit cards. It also very important to only open the accounts that you know you’re able to handle and maintain in good standing, so you can be sure that it stays reflecting as good debt. It is very easy to fall over the edge and before you know it fall into too much debt where it becomes not only hard to recover from financially but also from the damage done to your credit score.
If you have any questions regarding your credit or debt reach out to us at Credit Services of America. We have services to help anyone in need. Although many people think that even though they have a good credit score that they are set, there are so many other variables to your credit as a whole, that everyone could benefit from a completely FREE consultation. We can help find those areas of opportunity and guide you in the right direction to get you in an even better standing regardless of your current credit score or financial situation.
We can definitely help each and EVERY situation, please give us a call at 844-FIX-URCR or http://bit.ly/csaelpappt to schedule your FREE consultation!
*Individual results may vary. Please call for more details and to discuss your own individual situation.