When the average person hears the word ‘debt’, they tend to associate it with things like bankruptcy, bills, and collections agencies. While it’s certainly better to be in the black than in the red, not all debt is inherently negative.
Here’s what you need to know about good debt vs bad debt.
Why should everyone have at least some kind of debt?
You need to have some kind of debt in order to build a credit score. Why do you need a credit score? Because it’s the only way to show potential lenders that you’re a responsible borrower. Even if you plan to pay for everything with cash and debit, there are going to be times when you need a loan.
Trying to buy a car or a home without an auto loan or a mortgage is almost impossible for the average person. And good luck renting an apartment if the landlord or property manager asks to see a copy of your credit history to confirm you’ll be able to make your payments on time.
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