Is there such a thing as good debt and bad debt? There can be depending on how you look at it. Not all debt is bad, but not all debt is good either. Debt can impact your credit score, but the debt may also help you in your life if you need some help.
Some debts that might be considered good debt are low-interest debts, such as a mortgage, car loans, and even student loans. If you have low interest on these loans then you aren’t having to pay a lot of additional costs in the form of interest. If you need a house or a car then having debt for these things may be fine for you (if they are well within your means). Saving up enough cash for a house, car, or education may limit you, so having a loan for these things will allow you to reach your life goals.
Debt that has a higher interest rate can be considered a bad type of debt. Most credit card debt and even some student loans can have high-interest rates. Any debt that falls into high-interest rate debt can make it very difficult to pay off these bills. You will end up paying back the interest and never touching the principal. Being able to pay off the principal will be the only way to tackle this type of debt.
