Debt Relief 101: How Does Debt Affect Your Credit

By admin / February 21, 2018

When it comes to finances and planning for your financial future, your credit can become a huge, if not the biggest, factor. After all, it is your credit that acts as your financial resume to let the world of businesses and markets know how you act as a consumer or even as a potential business figure. This means all your financial movements can have a potential effect on your credit. This means, of course, that debt also has an impact on your credit.

Before taking out a debt, it is important to understand how having one can potentially affect your credit.

The Real Score With Credit

When it comes to understanding credit, the real deal happens when we look at credit scores. These are three numbers that determine a person’s “ranking” in terms of the way they manage their finances. The higher the number, the “better” a person’s standing when it comes to the financial world.

  • High credit people are those who manage their finances properly. These are the people who pay their bills on time, who do not have outstanding expenditures, and the like.
  • Of course, in an ideal reality, everyone has high credit. However, the reality is that not everyone gets to experience circumstances where they have all the means to ensure they have good credit.
  • If you are looking to clean up your credit, visit to get started. 

Debt and Credit

Having debt has a direct effect on your credit, and this can either be good or bad depending on how you handle your situation.

  1. The Promise of Debt is Reflected

A debt has a promise: you have to pay it, or else there will be repercussions. Part of these repercussions is a bad reflection in your credit. At first, we may think that these bad reports may have nothing to contribute to our credit, but that mentality is dangerous.

  • Remember that credit can have an affect on the kind of debt we can have in the future. If we have bad credit and we desperately need loans, we may not be able to be granted one because of bad credit. This is why it is important to avoid bad credit in the first place.
  • Not being able to pay debt on time is reflected on our credit, and lenders may not like this because it shows that we may not be reliable when it comes to debt repayments.
  1. Starting Low, Soaring High

Chances are, if you are new to the world of debt, you may not have the most excellent way of handling it. This is normal, as debts cannot be controlled, and we cannot dictate the way they affect our credit. We have different expenditures, and thus, different factors to base on. This “behavior” can be reflected by having low credit ratings.

  • You should not lose hope, however, While debt may reflect negatively in our reports so far, if we start repaying debts on time, it may eventually have a good reflection on our credit.
  • Always remember that credit ratings do not immediately go up or down, as these take time to be assessed. This means we have a lot of time in order to adjust our financial habits and aim for a higher credit score.
  1. The Numbers Do Not Lie

If you are planning to acquire any kind of loan, it is important to remember that your credit score can be a factor in your application. This means it is important to study your credit score carefully and check discrepancies and your overall expenditures.

  • Ten percent of your credit score can be based on the kind of accounts you have, and sometimes having outstanding balances or unused cards can have negative impact on your credit score.
  • You cannot just apply for multiple loans or credit cards and shuffle your money around. This will not increase your credit rating, and this can in fact have more negative impact for you.
  • Always remember to assess your credit report whenever you file for them, as these reports are made free specifically for this purpose. It is best you have all the data you need to assess your finances than for you to tackle debts without having any idea about how you should adjust your expenses in the coming months or years.


Debt and loans are normal parts of life, which means debt can affect your credit the way normal expenses do. The only time debt can have extremely positive or negative effects to your credit is if you get to manage them properly, and if this proper management is reflected onto your reports. This is why it is extremely important for you to assess your credits all the time when you have loans, as you need to check if you are slowly increasing your credit and if so take action to boost your family savings back up, or if you are already slowly in the process of reducing it further. Understanding how debt affects your credit score, and understanding how your credit score can affect your loans, are two important steps you can take to make sure you are on your way to financial stability.

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