NJ First-Time Home Buyers


When Reapairing Your Credit, Don't Forget About Good Debt

When Repairing Your Credit, Don't Forget About Good Debt

by Steve Kappre, NJ Loan Officer

Anyone who takes the initiative to restore their credit profile should be commended. Keep in mind though  that along with removing negative debts and history, many times new debt (that is good debt) needs to be established.

New Credit CowboyAs time passes, older items on a credit report have less and less effect on the credit scores. This is good in the case of bad debt, and not so good in the case of good debt. Good debt would be considered an account that has been active, has on-time payment history, and has low balances (in regards to the allowable limit).

Good debt can be a mortgage, a car loan, credit cards, or installment loans. Some debts are a little better to have than others but that is beyond the scope of this piece.

As a individual makes the effort to rid their profile of negative items, for the score to improve, the credit scoring system will need to see some timely (on-time) accounts. If your credit is too damaged to open a bank loan or credit card, the common method of re-establishing credit is through a secure credit card, which is basically a credit card where you put the "credit" upfront ($500 limit on a card would require a $500 deposit, for instance).

So remember, knowing how to correctly remove and repair items on the credit report is only part of the equation. Be sure to establish new, good debt. 

Credit Links

Credit Scoring - What Makes Up My Credit Score? (1 of 6)

Credit Scoring - Payment History (2 of 6)

Credit Scoring - Balances (3 of 6)

Credit Scoring - History (4 of 6)

Credit Scoring - Mix of Accounts (5 of 6)

Credit Scoring - Inquiries (6 of 6)


Steve Kappre is a mortgage loan officer in New Jersey. For more info or questions feel free to contact Steve.

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Comment balloon 6 commentsStephen Kappre • March 10 2010 06:06PM


Steve, very good advice. I remember getting this advice when I first started working and tried to get a loan.

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate (Vision Quest Realty) almost 10 years ago

Ha ! Wise words brutha ! Too many people think paying off all debt is the only way to improve their credit scores. As you stated, using certain credit, the right way, is paramount for good credit scores !

Nice !

Posted by Sheldon Neal, That British Agent Bergen County NJ (Bergen County, NJ - RE/MAX Real Estate Limited) almost 10 years ago

Great advice, Steve!  This is just the type of info that so many of today's buyers need.....so glad to read a cogent analysis.  Thanks!

Posted by Coleen DeGroff, Haile Plantation Real Estate - Gainesville FL (eXp Realty) almost 10 years ago

Rebecca - Glad to hear you got good advice!

Sheldon - It's not rocket science. Just have to do it right.

Coleen - Great to hear!

Posted by Stephen Kappre, Helping You Home (KW Hometown) almost 10 years ago

Interesting Post! Good information, thank you for sharing.

Posted by Brian L. Nelson, Seattle WA - Tacoma WA Home Inspector (AllTrade Home Inspection ) almost 10 years ago

Steve - It is imperative that a consumer have a "go-to" source in terms of what to do to both repair their credit AND to maintain their credit score.  You are that "go-to" person as you have loads of valuable info on the topic !

Posted by The Somers Team, Delivering Real Estate Happiness (The Somers Team at KW Philadelphia) almost 10 years ago

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