While an excessive amount of debt is not a good thing, there’s a benefit to having some amount of debt in that it can help your credit score. Here are a few ways different types of debt can affect your score.
- Revolving debt is a line of credit you can borrow every month, which has great flexibility. Though it is unsecured, it can often have high interest rates.
- Installment debt provides a large amount of money upfront, which can be helpful if you’re making a large payment. They can be harder to qualify for and you also usually pay them off in monthly installments.
- Open debt is a rare type of debt that most people don’t have. They usually come in the form of charge cards.
Image vi Quicken Loans.