Hi Agung
A debt is considered a good debt so long as you are able to repay it on time. Whenever you are unable to pay it back, it becomes a bad debt. Mostly pay day loans becomes bad debts because they come with very high rates of interest which most people are not able to pay back. What I think is that so long as a debt is not listed as negative in your credit report it is a good debt.
I too think so. A debt remains a good debt so long as it helps you to improve your credit history and hence your credit score. But if you become delinquent at some point of time and this debt gets listed in your report, your credit history is affected and your FICO score gets reduced and so it becomes a bad debt. Credit cards helps you to build up a credit history but if spend more on these cards and cannot repay back, it no longer becomes a good debt. So you should always spend that amount on your cards which you can repay back on time.
Anthony even if you get behind on a debt I read here as long as you catch it up before it is listed as a charged off debt that it will save the mark against your credit. Is this correct? I always suggest if you use a credit card pay that debt off at the end of the month or even at least two months but do not add any new purchases until the old one is paid off.
The first sign that debt is becoming more of an issue in your life than it should be is the incredible shrinking bank balance. Although you make enough to pay your regular bills, more and more of your monthly income goes toward servicing your rising debt. It gets to a point where money is tight, and you feel like you are choking because there is never enough money. Unfortunately, this situation creates a negative domino effect upon the rest of your financial life.
The first to fall is the credit card domino. Your lack of funds causes you to begin to take cash advances to pay your minimum balances or basic living expenses. You know that your gold card still has about $5,000 left on it, so you begin to use it to live on. Or, even worse, you begin to accept all of those credit card offers that come in the mail, and before you know it, you have 10 open credit cards.
You take out $100 here and $500 there. "No big deal," you think. After all, you are used to paying off your cards, or at least paying enough that the debt has not, so far, seemed burdensome. You begin to rationalize. You tell yourself that you're just in a temporary cash crunch, that this is why credit cards were invented. Feeling better, you take out another $500.
Also a good debt in credi card debt is a debt that is below 30% of your total available credit. i.e 1000 limit you should always keep your utlization below 300$ after you make your payment. Besides this as long as your are paying you debts on time every month it is good debt, that is if you are looking to improve your credit score. Other wise no debt is good debt.
Definately true ccw. Always try to keep your balances low. It is not just your credit score but if you would ever hit an unexpected glitch i n the road it will be easier to keep your bills paid if the payment is low.
True, I think a lot of people are realizing this now, I don't really have that many bills but it seems like we spend more and more when we should have a nice chunk of change in savings. Seems like their is always something needing fixing or repaired. or bought.
I think that if we spend a maximum of 30% of the existing credit limit on our cards and repay it on time, both the payment history and the amount owed factor which contributes about 35% and 30% of the credit score respectively will improve, thereby increasing your credit score. So a debt is a good debt so long as you can maintain these two factors, which together contributes maximum in your credit score is maintained properly so that it gives a positive impact on your credit score.
Hi Agung
A debt is considered a good debt so long as you are able to repay it on time. Whenever you are unable to pay it back, it becomes a bad debt. Mostly pay day loans becomes bad debts because they come with very high rates of interest which most people are not able to pay back. What I think is that so long as a debt is not listed as negative in your credit report it is a good debt.
I too think so. A debt remains a good debt so long as it helps you to improve your credit history and hence your credit score. But if you become delinquent at some point of time and this debt gets listed in your report, your credit history is affected and your FICO score gets reduced and so it becomes a bad debt. Credit cards helps you to build up a credit history but if spend more on these cards and cannot repay back, it no longer becomes a good debt. So you should always spend that amount on your cards which you can repay back on time.
Anthony even if you get behind on a debt I read here as long as you catch it up before it is listed as a charged off debt that it will save the mark against your credit. Is this correct? I always suggest if you use a credit card pay that debt off at the end of the month or even at least two months but do not add any new purchases until the old one is paid off.
The first sign that debt is becoming more of an issue in your life than it should be is the incredible shrinking bank balance. Although you make enough to pay your regular bills, more and more of your monthly income goes toward servicing your rising debt. It gets to a point where money is tight, and you feel like you are choking because there is never enough money. Unfortunately, this situation creates a negative domino effect upon the rest of your financial life.
The first to fall is the credit card domino. Your lack of funds causes you to begin to take cash advances to pay your minimum balances or basic living expenses. You know that your gold card still has about $5,000 left on it, so you begin to use it to live on. Or, even worse, you begin to accept all of those credit card offers that come in the mail, and before you know it, you have 10 open credit cards.
You take out $100 here and $500 there. "No big deal," you think. After all, you are used to paying off your cards, or at least paying enough that the debt has not, so far, seemed burdensome. You begin to rationalize. You tell yourself that you're just in a temporary cash crunch, that this is why credit cards were invented. Feeling better, you take out another $500.
good debt is making your payments on time, it is also good to have different types of credit, they are referred to all of these as tradelines.
Citi does give some good advice to people who are becoming victims of the credit trap.
that is good fireyone
I would say that that was one hell of a teaser, like come read more!!!!
Also a good debt in credi card debt is a debt that is below 30% of your total available credit. i.e 1000 limit you should always keep your utlization below 300$ after you make your payment. Besides this as long as your are paying you debts on time every month it is good debt, that is if you are looking to improve your credit score. Other wise no debt is good debt.
Thats credit. Your really have some good wise words of advice. These ae hte posts I like to read.
Definately true ccw. Always try to keep your balances low. It is not just your credit score but if you would ever hit an unexpected glitch i n the road it will be easier to keep your bills paid if the payment is low.
True, I think a lot of people are realizing this now, I don't really have that many bills but it seems like we spend more and more when we should have a nice chunk of change in savings. Seems like their is always something needing fixing or repaired. or bought.
I think that if we spend a maximum of 30% of the existing credit limit on our cards and repay it on time, both the payment history and the amount owed factor which contributes about 35% and 30% of the credit score respectively will improve, thereby increasing your credit score. So a debt is a good debt so long as you can maintain these two factors, which together contributes maximum in your credit score is maintained properly so that it gives a positive impact on your credit score.