Good vs. bad debt: Take the quiz to find out which type you have

Debt: Most of us have it, but very few of us want to talk about it. While it can be a stressful topic, well-managed debt is essential for building strong credit and a solid financial future.

What is good debt?

Some debt is good as long as you're making regular, on-time payments and building equity. Good debt includes things like student loans , mortgages and small business loans.

Auto loans can lean good or bad , but if your vehicle enables you to take care of necessities like going to work, buying groceries or taking  your kids to school, you might consider a car loan to be a positive contribution to your life, as long as you're making consistent payments.

What makes them good? Over the long term, they're investments with tangible returns that will build equity. For instance, your student loan will get you a degree that can get you a higher-paying job. And your home will likely increase in value. It's this kind of wealth-building debt that can establish you as a reliable borrower.

Read more: Manage your debt payments with buckets

What is bad debt?

The darker side of debt includes anything that could be a sign you're living beyond your means (a red flag for vendors). Bad debt can include things like credit cards , personal loans and payday loans. If you're overextending yourself in the auto loan category, that might also be considered bad debt.

Keep in mind that not all of these will hurt your credit score as long as you're making regular, timely payments. However, if you have this kind of debt, it's important that you prioritize paying it off first.

How to manage debt

Find your balance

Whether it's good or bad, debt is a reality of almost everyone's financial life. By better understanding the kind of debt you have and your payment options, you can start taking the steps necessary to make it more manageable.