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Level 3

Is all debt bad?

I agree up to a point.  Debt used to acquire income producing assets is good debt.  If what you are buying on credit does not produce income, that is bad debt if you carry a balance.  Financing the purchase of a rental property is good debt if the rental income is paying off the loan.  Using a credit card to buy groceries, a vacation, a restaurant meal, etc. is bad debt but only if you don't pay off the credit card statement balance in full each month.

 

Most would consider the mortgage on a primary residence a liability (because the asset does not generate income), but necessary debt to provide a roof over your head.  

 

There is no magic number of loans or credit cards for a good credit score.  What matters is your payment history and the length of your credit history and your % credit utilization.  I see a lot of posts in this thread that claim there is a limit on the number of loans and credit cards you can have for a high credit score.  I have 9 mortgages, and seven credit cards and two HELOCs that are treated as revolving credit lines.  My credit score last month was 843  with a credit history of on-time payments for the past 30 years.  My credit card utilization rate is under 10% right now only because I have some credit card balances at 0% APR.  These balances will all be paid in full by the time the 0% promotional rate period expires. 

 

A couple of years ago, one bank I use offered a 0% interest, $0 cash advance fee for a 13-month cash advance.  I used the cash advance to borrow $25000, then used the money to buy a few CDs at my credit union.  The credit union paid me 2% interest ($500) over the following 12 months.  I made minimum payments ($250) to the credit card balance then paid the balance in full when the CDs matured.  I just viewed that experience as receiving a $500 cash gift from my bank for being a good customer.  

 

The point I am trying to make is credit can be your friend if used responsibily.