What Do Debt-Free Americans Have in Common?

People without debt are all in on a secret, right?

Not really. Other than their minimal or nonexistent debt loads, these Americans don’t have a lot in common: Their ages, incomes, locations, genders and education levels are all over the place, according to Credit.com’s recent survey Americans and Credit Card Debt.

Looking at respondents with less than $1,000 in outstanding credit card debt, there aren’t any definitive characteristics of debt-free Americans, but there are some trends worth noting.

More than half of the 2,227 survey respondents said they had no debt or less than $1,000 of it, and just like most of the people included in this sample, the primary reason they gave for the credit card debt they do have is insufficient income.

So what sets these nearly debt-free Americans apart from the rest?

Fewer Credit Cards

When compared to the entire sample, those with little or no debt had fewer credit cards. It makes sense that if you have fewer cards, you may not rack up as much debt — there’s less temptation, and there’s likely less available credit to spend, too.

“That could either [mean] they’re more conservative about their spending, or they have less access to credit,” says Gerri Detweiler, Credit.com’s director of consumer education.

About a quarter of this low- or no-debt group said they don’t have any credit cards, but just as many said they had between three and five cards. Twenty-two percent said they had one. In the entire survey, three-to-five was the most common number of cards, with 33% of people giving that answer.

Keep in mind that debt use (aka credit utilization) makes up a significant portion of your credit scores, so the lower your outstanding debt relative to your available credit, the better. When it comes to credit scoring, then, $500 of credit card debt doesn’t mean the same for everyone. It’s considered a lot of debt for a person with a $1,000 credit limit, but for someone with a total limit of $20,000, it’s considered to be very little. So even though these respondents don’t have a lot of debt when it comes to dollar amount, it doesn’t necessarily mean they have great credit.

Keep a Budget

Budgeting was the No. 1 strategy for paying down debt among all respondents, with 60% of the sample saying that’s what helps them. It’s no different for the people with minimal debt: 60% started budgeting to pay down debt.

What’s more, 48% of them said they have been successful in paying down credit card debt in the past, and 46% have never been in credit card debt at all. If you haven’t jumped on the budgeting bandwagon yet, that’s a good reason to do it. Couple that with a less-is-more strategy when it comes to number of cards, and you may be able to minimize your risk of falling back into credit card debt after you’ve paid it down.

Build Your Credit Without Debt

There was one negative that stood out among the little-or-no-debt group. In response to the question “What is the primary reason you have credit card debt,” respondents said they carried debt to build their credit history. Perhaps the respondents consider using credit cards as carrying debt, even when the balances are paid in full. In that case, yes, this strategy can help your credit.

But there’s a common misconception that you need to carry a balance on credit cards in order to have a good credit score.

“I do hear that comment fairly frequently,” Detweiler said. “It is a fairly common misperception, especially among people who are starting out to build credit or trying to rebuild credit. It can be a waste of money, and it probably won’t have the effect you thought it would have.”

That’s because you have to pay interest on balances you carry across billing cycles (unless you have a promotional 0% financing rate). And the longer you keep outstanding debt, the longer it can affect your credit scores, because that debt increases your credit utilization ratio. It also leaves you with less available credit to use if and when you need it.

You can see how carrying credit card debt impacts your credit scores, because as you pay it down over time, you scores should go up. It’s easy to see how this works by comparing your credit scores periodically, which you can do by using a free tool like Credit.com’s Credit Report Card.

When it comes down to staying out of debt, there’s no secret — it definitely sounds easier than it is, but the key is to get organized, spend within your means and pay your bills on time. Then you can join the less-than-$1,000 debt club. It’s something to work toward.