Debt can have a significant impact on an individual's credit score and overall financial future. When an individual carries a high amount of debt, it can negatively affect their credit score, making it more difficult to secure favorable interest rates on loans and credit cards. Additionally, high levels of debt can limit a person's ability to save for the future and invest in long-term financial goals.

One of the primary ways debt affects credit scores is through the utilization ratio, which is the amount of credit being used compared to the total credit available. High levels of debt can lead to a high utilization ratio, which can lower a person's credit score. For example, if a person has a credit card with a $10,000 limit and carries a balance of $8,000, their utilization ratio is 80%, which is considered high and can negatively impact their credit score.

Furthermore, carrying significant debt can also result in missed payments and defaults, both of which can have a severe impact on credit scores. For instance, consistently missing payments on a mortgage or auto loan can lead to a significant drop in credit score and make it challenging to secure future loans at favorable terms.

In terms of long-term financial future, high levels of debt can hinder an individual's ability to save for retirement, invest in assets, or purchase a home. For example, if a person is burdened with high student loan debt, they may struggle to save for a down payment on a house or contribute to a retirement account, delaying important financial milestones.

It's important for individuals to manage their debt carefully and consider strategies such as debt consolidation, budgeting, and seeking financial counseling if necessary. By taking proactive steps to reduce and manage debt, individuals can improve their credit scores and work towards a more secure financial future.

References:

• "How Debt Affects Your Credit Score" - Investopedia
• "The Impact of Debt on Your Financial Future" - The Balance