Facts And Falsities About Fixing Your Credit
- By
Julia Austin
Source: krisanapong detraphiphat / Getty
What is bad debt?
Auto loans, says Humphrey, can be bad debt. “The standard [repayment period] is up to 72 months on a depreciating asset. People are looking at what they can afford monthly and not understanding the terms of what they’re paying for because you often pay two to three times what the vehicle is worth,” she says. “I’m an advocate of getting into something where you can pay it off in under 48 months, 36 months if possible. Bad debt is also taking on too much credit. If you take on too much, you’re apt to spend more. You treat it like an emergency fund, instead of having savings in place. You look at credit cards as your safety net.”
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