5 Myths About Debt That Nobody Should Believe in 2024
5 Myths About Debt That Nobody Should Believe in 2024
May 1, 2024 4 MIN READ by Vance Cariaga
If you’re an adult, chances are you have some kind of debt. More than three in five Americans (61%) are in credit card debt and owe an average of $5,875. Americans collectively have about 84 million mortgages totaling more than $12 trillion, according to LendingTree. The Education Data Initiative estimates that 43.2 million U.S. borrowers have federal student loan debt.
Those stats don’t even include car loans, personal loans, business loans, lines of credit and other sources of debt. Given how much debt Americans carry, you’d think they’d do a better job of separating myth from reality.
Sadly, that’s not the case. Many debt myths are still alive and well in 2024. Here’s a look at five myths nobody should believe anymore.
Myth No. 1: All Debt is Bad
On the contrary, debt can be a positive financial tool when used wisely. Unfortunately, debt carries a negative stigma with many people, according to Natalia Brown, Chief Compliance and Consumer Affairs Officer at National Debt Relief, a provider of debt settlement and relief services.
She says there are a lot of reasons this myth persists.
“We may have watched our parents or someone close to us have terrible experiences with debt, lack of overall financial education, believing credit is not easily accessed and not knowing the benefits of debt when leveraged appropriately,” she said in an email. “These stigmas are unfair, because debt can be leveraged in ways to grow wealth.”
As an example, Brown cites real estate investments, which let you earn income that can be used to pay down the mortgage while also building wealth.
One of National Debt Relief’s missions is to change negative stereotypes about debt. Since its founding in 2009, National Debt Relief has helped more than 550,000 people resolve more than $11.5 billion in debt.
Myth No. 2: Every Debt Lowers Your Credit Score
Debt doesn’t necessarily lower your credit score. In fact, taking on debt and managing it successfully can actually boost your credit score.
For one thing, you need to establish a credit history to get a score to begin with. From there, your score can improve based on things like the length of your credit history, your payment history and your credit utilization ratio.
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