Credit & Debt

According to USA Today, the average revolving debt for students in 2006 was $5,781 dollars – not including student loans.

You create debt for yourself when you borrow money from a third party (like a friend, family member, bank or credit card company). Debt can come in many forms including a student loan, a big purchase (like a car or house) or overspending on credit cards.

When you borrow money and create a debt, anything you purchase with that money is bought on credit; whoever loaned you the money is trusting that you will pay back your loan. One of the most common ways to receive credit is through credit cards. When you use a credit card, you are borrowing money from a credit card company to make a purchase, and then you pay off that loan when the company bills you.

Benefits: Debt can be good—making timely payments on small loans and credit cards shows lenders you are a responsible borrower, so when you apply for a big loan you'll pay much lower interest rates than a borrower who's earned a riskier reputation.

Challenges: Debt can also be bad—rack up debts that you can’t pay off and you could become one of those bad-news borrowers, and that can hurt you for years to come. While you can clean up a bad credit score, it takes a lot of time and effort.

It’s okay to have debt, just make sure it's manageable debt. Debt can come from a lot of sources, so it’s important to keep track of all your loans and credit lines.

Credit Scores

Credit Card Debt

Getting Out of Debt