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Good Debt VS. Bad Debt

5 Tips To Reverse Bad Credit

A lot of what we know about money and credit is from decades past. 

Teaching jobs paid a “decent and respectable” wage that you could count on for the rest of your life. 

You could look forward to retiring at age 55 and living out the rest of your days in comfort.

And you just didn’t get into any debt. All debt was bad and you avoided it at all costs.

So what does that have to do  with good debt and bad debt?

Well, today is different. 

Jobs, unfortunately, just aren’t secure. 

Teaching jobs today are well known for not being chosen for the money you make (people teach because they are dedicated to educating others, not for the money).

You may retire, but it will be a decade after 55, and that doesn’t mean you stop working (many go on to work in grocery and retail stores to afford the tax on their homes).

And the average person needs more than a million dollars to secure their retirement.

So is it really a surprise that debt is no longer quite the same as it was decades ago? Not at all.

It is actually more surprising that there is no mainstream financial education.

Debt has two formsgood debt that pays itself off while it simultaneously provides you a benefit, and bad debt that requires you to use your resources to maintain it with only a short-term benefit.

Most of us are familiar with bad debt, but did you know that you can turn your bad debt into good debt?

It just requires you to change your habits.

Here are the 5 Tips to Reversing Bad Credit by turning your bad debt into good debt.

  1. Debt should pay itself off and provide you a benefit in return. Your 14 credit cards with 65 – 80%+ utilizations need to be paid down below 35%. If your cards have available balances, you can use the available balance toward the payment of a card to bring the utilization back down to 0%. Here is why:
    • When you use the available balance on snacks, gas, or bills, you won’t see that money again.
    • Using the card’s available balance to pay another card frees up the available balance on the second card. It pays a debt and pays you back.
    • Eventually, with strategic planning, you can pay the balances down on all of your cards and keep your utilization low.
  2. Consolidate your debts while your credit is bad. Those 14 credit cards are not all providing you the best benefits. Some of the cards have lower interest than others. Consolidate the cards down to 3 or 4 by transferring your credit line to other cards. This will raise your credit lines, providing you with more leeway in your utilizations, and will help you keep better track of your credit cards. Do this while your credit scores are low so that the hit you take can be lessened early.
  3. Only apply for credit cards to get a high credit line. The higher your credit line, the higher your available balance will be. This is a great way to lower your utilization without making payments right away if you have had your cards for a long time.
  4. Know that your credit lines can be used as collateral. The purpose of credit cards is to have access to other people’s money (OPM). Having access to OPM allows you to purchase assets – investments that create a cash flow to increase your income). Your goal shouldn’t be to pay for gas and lunch and have access to credit cards for emergencies only. This will create a situation where your utilization sky rockets for an unpredictable and unknown situation. Create other ways to increase your income using those credit cards so that you create additional incomes to protect you from emergencies instead.  Make the purchase of incidentals an easy non-factor to your income.
  5. Diversify your credit portfolio. Get a secured personal loan to diversify the types of accounts your credit will give you access to. This will raise your credit scores with other factors by paying yourself back on time.

I hope you enjoyed reading this post. If you have any questions about the 5 tips to reversing bad credit or changing bad debt into good debt, or you have written your own review about reversing your bad credit, leave me a comment below.


If you are interested in starting the approval process off with raising your credit scores for free, I invite you to take my free, four-part, Dispute Letter Mastery Course.

In this course, you will learn how to update your personal information, dispute information that has errors, and delete negative information in order to raise your credit scores 50 – 75 points in only 45 – 60 days. A boost like this can really make a difference in your interest rates, and it is all free.


  1. You have given some really interesting information in the article about good and bad debts. And especially some really logical solutions about how to solve a debt problem using your credit cards. Some lovely tips in there that I never would have thought of. And I can’t believe that the average person needs more than a million dollars to secure their retirement. That is absolutely shocking, and frighten me!

    • Hi Ruth,

      Thank you for your comment! I am glad that you found my post informative. I am hoping to provide information that people never really thought about and give them a new way to look at their credit. I hope that I have done that for you.

      Check back with us for more information and more great techniques to turn your credit into an asset in your life.


  2. Hello

    Excellent article, I was just browsing when I came across your article. Thank you for sharing this information with us, I have found some very useful pointers to take away with me. I know others will also benefit from it. You clearly know your stuff.

    It all comes down to financial education and some people just dont have it, it is essential to succeed in this day and age

    again thank you for sharing, I know many people will benefit from knowing this now. I hope to hear from you soon, I will pop back in a few days to hear your response.


    • Hello Jack,

      Thank you for your kind comment. It is amazing how challenging financial education is to obtain on your own. When I think about my own financial education and where it came from, it was in tidbits as needed and when things became tough. There was no strategy or plan going in, it was a free fall. My hope is to help others avoid the free fall as best as possible, if not for themselves, than for others who will rely on them.

      Definitely come back soon. :) And please pass this blog onto friends and family who you think may benefit.


  3. Thanks for the terrific explanation of good debt vs bad debt. Why aren’t we taught this in school? Probably because billions of dollars are made off our ignorance of how to manage money.

    Ultimately, of course, we are each responsible for our income and our debts. Thanks for showing us a way out.

    • Thank you for your comment, G.C. We are certainly each responsible for our income and debts, which is why we should give ourselves a chance to ask the right questions about what we have access to and what it’s potential really is. What OUR potential really is. Good Debt & Bad Debt suggests that our thought process about our purpose in life is just to survive and maintain at a bare minimum. I desire more than the bare minimum in my life. Is your purpose to survive, maintain or to obtain a quality of life? Hopefully this helps readers to begin asking bigger questions to achieve better answers.

  4. Thanks for sharing this. It was informative and helpful. Credit is now a norm in our society. People buy everything on credit these days. To me, people who have no self-control should never get themselves a credit card. It’s only going to spell trouble for them. You need to have the financial education to know how to use credit and debt properly.

    • Hello Andrew,

      Thank you for your comment. Credit is certainly an advanced personal and business finance technique that requires a solid foundation in order to achieve what I refer to as Credit Mastery. Credit is best learned from an experienced mentor, and a great place to start is by picking up my book The Credit Mastery Handbook. It begins with asking important questions about why credit is important and how you can use your personal credit to fund your goals and dreams. The wealthy use credit, also known as other people’s money, to create exponential wealth. It is the secret formula that keeps you from living paycheck to paycheck and all people should have a reliable knowledge base about what their credit can do for them

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