Personal debts are the obligations for which you, as an individual, are responsible for repaying to your creditors. Any loan, credit card or lease that you filed in your individual name qualifies as a personal debt. These debts impact your FICO score and play a key part in a lender's decision to extend you credit. You should be aware of each item that comprises your personal debt.
Credit Cards
The most common personal debt is unsecured credit cards. These vary in limits, fees, usage and rates. It is important to note several key aspects of having credit cards that can affect your credit score. A high balance, specifically one that is close to the limit will lower your score. Balances that grow too fast can also be detrimental. It is also important to keep monthly payments low, as these will factor in to debt-to-income calculations
Mortgages/Home Equity Loans
Personal debt includes any loan secured by your home. Commercial properties owned by business entities will not be included. First and second mortgages and home equity loans, however, are always included. It does not matter if the loan is on your primary residence or not, as vacation and investment properties that are in your name are also included.
Auto Loans
Auto loans are another common personal debt item. The monthly payment and the remaining balance will show up each time your credit report is run. Also, be aware that leases count as much as purchases. Even if you have co-signed on an auto loan, you are obligated to that debt as well; although someone else is making the payments, you have essentially guaranteed the loan.
Student Loans
Student loans are included in your personal debt and will show on your credit report. The deferred status, however, is what will determine if the loan amount is used in debt calculations. If you are currently enrolled in an education program and your payments are deferred until completion of your schooling, the loan is still listed on your credit report. The only difference is that no monthly payments are indicated yet.
Liens and Judgments
Personal debt is not just inclusive of the obligations you've entered into voluntarily. You must include any liens and judgments against you. These include tax liens, sewer liens, lawsuits and other judgments levied by a court of law -- whether you are currently in a dispute is irrelevant. If you have been told that you must satisfy the lien or judgment, it must be included in your personal debt.
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