Debt considered recurring by lenders includes payments for obligations such as a car, minimum credit card payments, student loans, mortgage payments and child support payments. If you pay off your entire balance on credit cards each month, these payments don’t count as recurring debt. If you bought a set of kitchen appliances and are paying that off monthly, that’s considered recurring debt because you can’t easily cancel your payments. Conversely, if you subscribe to a magazine or have an Internet or phone contract, those obligations are not considered recurring debt because there is no fixed debt amount you are paying down and you can cancel your contract.
Improve Your Purchasing Power
While having some recurring debt can improve your credit score, too much can hurt you. Eliminating some of your recurring debt may improve not only your credit score, but your ability to qualify for a mortgage as well. Consult your mortgage broker about which debt you may want to pay off first.