Not sure about USA, but principles we use should still apply.....

There is usually a central credit reference agency (Baycorp in Australia) that keeps a record of any bad debts you might have incurred. The ones to look out for are the telco's who smack you for a late bill payment by registering you on the agency. They know it impacts on your Credit Rating, so that's why they do it.

Generally, the first thing to is to obtain a copy of your own report (by contacting the agency direct) and assessing what, if any bad debts you have. The only way to remove bad debts is to 1. pay it, or 2. wait (in Aus) 5 years. Once paid the company should remove the reference.

You can still obtain mortgages/loans with bad debt by using Low Doc products that cost more (say an extra few points in interest) but if this is the only way to get what you want then the cost is insignificant compared to missing out. It also allows you to then demonstrate a good credit rating over the period of time you have that loan.

If the question is related to bad debts as in too many, then you need to talk to a broker to ascertain the BORROWING CAPACITY. Usually the killer in servicing calculators are the credit cards, and store cards. They take up a lot of the avail cash at a high interest rate, are usually never paid off and the debt has to be allowed for in the liabilities.

So, first step is eliminating credit cards over say $2500 in limit, and store cards completely.

As for as a savings plan, I personally am not in favour of them. You can make more money by buying and selling a few investment properties than you'll ever save..... but that kind of advice needs to come from a Financial advisor/planner

Cheers

PS. Keep in mind that each time you apply for credit, be it a credit card or loan, going around and submitting multiple applications is a mistake as each application is registered on your Credit Report and it can look like you are either being refused credit (hence the multiple applications) or are getting a number of loans (so they write down your serviceability)

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