By definition, a debt is an unpaid loan. However, debt is more often used to describe the concept of having many debts...or being in debt: having debts that exceed one's ability to pay them in full within an immediate time period.

Regardless of the kind of debt—credit cards, personal cash loans, student loans, and medical bills, as well as auto loans and home mortgages—all usually have a loan payment plan that lets the borrower pay back the loan over a period of time (term) and with interest.

Very few people are in a position to pay cash for a home, which means they must get a mortgage to buy a house. Home loans are not unlike most other kinds of loans: they include the borrowed amount (principal), a fee for the privilege to borrow the money (interest), and a payment schedule.

And, like most loans, a person's credit plays a big role in how much they can borrow and how much interest they will pay.

Debt has a significant impact on one's credit score, which is why potential homeowners are encouraged to eliminate as much debt as possible before shopping for a home loan.

One way to reduce or eliminate debt (and improve your credit report) is with debt consolidation.

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