Debt can be both good and bad, depending on what the particular debt is, and what the interest rate is on that debt.  While millions of Americans have credit cards and other forms of debt, such as personal loans, auto loans, and home mortgages, there are some people that have found a way to live without debt.  For example, if a person has no credit cards, no loans, and does not own property, he or she has avoided the need for debt.  However, that person is likely to need credit down the line to buy a home or car, or attend college.  Living free of the burdens of debt can be refreshing and stress-free.  But, there is a downside to living without any type of debt.  With no debt, you have little to no credit history, and you may be denied credit in the future.

How Some Debt Can Help Your Credit

Because having at least some debt is more helpful to your credit than having no debt at all, you should consider how certain debts can increase your credit score as well as help you qualify for credit in the future.  The first step to establishing credit typically begins with getting that first credit card.  Unfortunately, credit card companies prey on individuals with no debt, offering them very high interest credit cards.  However, there are credit cards available that have lower interest rates and lower limits, which helps the consumer keep the debt to a minimum and make timely payments.  Once you prove that you can manage a credit card and eliminate debt, your credit score should begin to rise.  You then may qualify for other types of credit, such as an auto loan.  As you continue to manage your debt, you will demonstrate that you are creditworthy and would likely be able to handle large debt in the future, such as a home loan.

Debt to Stay Away From

One of the biggest mistakes consumers make after they get that first credit card is to continue to apply for additional credit cards.  This happens frequently with young adults in college who are not even thinking about interest rates and how they could be paying for their credit card debt for a number of years or even decades.  Further, many consumers fall victim to the department store credit cards when they are at the checkout counter.  Getting that 10 or 15 percent off your total purchase one time is not worth the exorbitant interest rates that are attached to a department store credit card.  Additionally, payday or installment loans can be extremely harmful as the interest rates on these loans can nearly double the amount you owe, and should be avoided at all costs.

Contact Kansas City Bankruptcy Attorney Douglas Breyfogle Today to Schedule a Free Consultation

While it seems counterintuitive that having debt helps your creditworthiness, it is important to understand both how some debt can help you, and how debt can harm you.  Having a good balance of debt and equity is essential to financial health.  If you have found that debt has taken over your life, and you have been unable to tackle the debt on your own, it is time to turn to the assistance and advice of a seasoned Kansas City Bankruptcy Attorney.  Bankruptcy may or may not be the best way to eliminate your debt.  However, a bankruptcy attorney can provide you with different options for eliminating debt that may better suit your particular financial situation.  With more than twenty years of experience, Kansas City Bankruptcy Attorney Douglas Breyfogle has the necessary qualifications and dedication to help you eliminate your debt in the most feasible way possible.  If you would like to discuss your financial situation with Douglas Breyfogle, contact our office today by calling (913) 742-8700 to schedule your free consultation.