Bad Debt And Good Debt – How To Turn One Into The Other


It’s time to turn things around.

When it comes to debts there are two clear types: good debt and bad debt. The difference between the two depends on various factors, such as why you’ve ended up in debt and whether you can afford to repay it. The wrong kind of debt can destroy your credit score and make it hard to borrow money when you need it. People in this situation may need a bad credit loan in order to borrow or loans with no credit check. When it comes to changing your debt situation, a little effort could be the key to turning it around.

How do you get into bad debt?

It’s all too easy to end up in debt – and not the good kind. If you’ve been tempted by travel, shopping or luxury items that you know you can’t really afford, and you’ve used debt to pay for them, that’s bad debt. If you’re struggling to make repayments on the debt or you have multiple debts that are starting to feel overwhelming then the situation might feel hopeless. However, there is always a way to make positive change and turn bad debt into good.

Work out how much you owe. Get some perspective on those bad debts and work out exactly how much you owe, including any interest and fees that might be payable.

Look for a cheaper option. If the debt you have is unaffordable because of the cost then you might be able to find a cheaper option elsewhere. Look for debt with a lower interest rate and no fees to cut the cost of what you’re borrowing. If you’re able to refinance existing debt with debt that costs less then you’ll find it easier to pay it off.

Consolidate debts together. If you have multiple debts then you might be struggling to make all the repayments at the right time. If some or all of those debts are high cost then the overall impact could be crippling. Consolidating debts gives you the opportunity to bring everything you owe into a single account with one monthly repayment. Ideally, you’ll also be paying less in interest than with the old, “bad” debt.

Ask for some help. There are many organisations that can provide free advice and help when it comes to dealing with your debts. It may be that all you need to turn bad debt into good is the right advice on how to manage the repayments and make them more affordable.

Speak to your creditors before it gets desperate. Rather than missing payments on debts or ignoring mounting problems, speak to your creditors and let them know you are struggling to repay your debts. It may be that your debts can be restructured so that you are able to repay them and still live affordably at the same time.

Make some changes to the way you manage your money. It doesn’t take much to turn your situation around when it comes to debt. Cut back on non-essentials, switch to cheaper deals and find ways to earn a little extra income to help make those repayments. Once you start to get ahead on repaying bad debts then many opportunities open up, including being able to borrow constructively – for a home or a car – and at better rates of interest too.