Beyond FICO: A Strategy for Productive Debt or Personal Leverage

Michael Leslie/ShutterstockA productive debt or personal leverage strategy starts with letting go of the idea that all debt is bad. Your FICO score doesn’t always reveal your true debt situation. Those who understand good debt versus bad debt strategies know they can use borrowed money to acquire assets that grow in value or generate income. But there are fundamental rules to a productive debt strategy, such as maintaining a positive interest-rate spread, ensuring projected return on investment (ROI) exceeds the cost of capital by a safe margin, and avoiding depreciating lifestyle expenses through leverage.