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How to Use Debt to Your Advantage

By: Michael Millington

Most times, debt is seen as a blemish on a financial record. When people have debt, the first thought is to eliminate it. To many, having no debt is better than having any kind of debt at all. However, having a line of credit involves having a certain amount of debt at any one time. There are a few reasons that you might want to consider keeping a certain amount of debt throughout the months. While debt can grow to become an overwhelming problem, keeping debt at a manageable level can prove to be beneficial towards your FICO score and your credit report.


Increase Your FICO Score

When your payments grow delinquent, your FICO score tends to suffer for it. The longer your payments remain unpaid, the worse your FICO score. Contrarily, if you pay the minimum amount due on the account and continue to make payments on time, your FICO score generally sees an increase. One method of seeing your credit increase is to have a manageable balance to pay down (or pay off) on a monthly basis. This can be a consistent approach towards fostering a steady increase in your FICO score.

While keeping a balance throughout your lines of credit equal to or less than 30% of your total amount, you will be deemed as being in the optimal credit debt range. Having 30% or less of your credit used can give you a workable debt. With this type of debt, you can continuously pay off the balance you have, effectively raising your FICO score. One of the categories that affect a FICO score the most is the percentage of on time payments. Regardless of whether you have massive amounts of debts, making your monthly payments on time will count positively towards your credit record.

To maintain a reasonable amount of debt, take a look at your budget and determine how much you can comfortably pay each month. Making payments on this kind of debt should not be a burden to you when your monthly income comes in. If you find that you are stretching yourself too thin to make your payments, you might need to explore other avenues to handle your debts. Trying to handle debt when it grows beyond your control will not only have a detrimental impact on your FICO score, it might cause other types of expenses to falter as well.


Force Yourself into Debt Discipline

One thing that financial obligations can accomplish is financial honesty. If you did not have the ability to honestly assess your finances before, having to handle your debt can quickly show you the truth of your money habits. Holding on to debt can easily grow out of control for even the most cautious individuals. An exceptional amount of discipline is required to keep your debt levels at the same spot every month. Having debt can make this kind of focus necessary for your financial future.

The main reason financial obligation can bring about discipline is the fact that debt can become more stressful as it continues to linger. When debt hangs around, creditors become more aggressive in their collection tactics. Some creditors go so far as to send you to a third party debt collector when they haven’t received payment from you in a while. Some balances can go to court to get collected, becoming a legal matter that would count negatively against your credit record.

Creating and following a budget is one way to exhibit discipline in dealing with financial obligations. Setting exact spending limits for nonessential expenses will mean nothing if you cannot adhere to the numbers. Once you have settled into the habit of limiting your spending, you might find it easier to set limit for your money. When you have complete control over everything you earn, spend and pay off, you’ll have a better handle over your financial obligations.


Set Yourself Up for the Future

The best reason to take advantage of the benefits of financial obligation is the affects it will have for your financial future. Having a great foundation for your credit can help you achieve loftier financial goals into your later years. Preparing your credit with positive debt management, responsible budgeting and financial discipline will have massive benefits when you have other needs for credit or loans. You might even find it easier to handle long standing financial obligations, like student loans.

Big purchases, like a car or a house, are affected by your credit. Whether you can get a loan is made easier or more difficult based on your credit record. Taking advantage of debt early on can give you an easier time in garnering other lines of credit or loans. One of the factors that affect your FICO score is the collective age of your credit. The longer you keep your credit lines open, the better off your FICO score will be. This will also help you garner positivity from creditors.


Having control over your financial obligations can be a wonderful feeling. Being able to control all of your finances can help to improve poor credit or maintain great credit. However, there are some who don’t have the ability to gain that level of control. Some debt is too overwhelming to get under control alone. Guardian Debt Relief is here to help. If you find that your debt is too large to control, give our debt experts a call so we can assess your situation. Let us see if we can help you regain control over your finances. Don’t hesitate, contact Guardian Debt Relief today.

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