There must be thousands of articles and books devoted to showing us how to save our credit rating. Truly, the subject is everywhere these days and it is a serious matter. In this society, having good credit is very important for the health of your financial life. From the simple purchase of a ten dollar item to the major purchases of thousands of dollars, your financial credit history plays an important role in how easy or difficult the transaction will be for you. Every time you reach for your credit card to pay for something you are subject to a credit check as the card is swiped. Sometimes the machine fails and you are rejected even though you have established a sterling credit history. Such is the tyranny that we live under. If you are just entering adulthood, you may not be aware of the problems all this credit caused your great grandparents.

Back in the fifties and early sixties large department stores and banks starting issuing credit lines (fancy jargon meaning that the bank was giving you the opportunity to buy now, pay later) to individuals. Corporations had been enjoying this borrowing for quite a while longer. Back in those days people were used to paying for their purchases when they received them – "no ticky, no shirty". They paid by cash, or sometimes by check, but when they left the store, the exchange of money and goods was complete. No problem (unless the check bounced). With the acquisition of one’s own credit card, however, the spending seemed limitless. The idea of buy now, pay later was advertised everywhere. And the people were giddy! Some people were more conservative; they stuck with the cash method because they were more comfortable. Most others, including housewives, thought the idea of limitless credit was delightful. "Just think", they thought,"I can get anything I want right now, and I don’t have to start paying for it until a month from now." It was too much for many people to get the idea that someday the bill will come in the mail. People didn’t think that far ahead; they would think about it later. Unfortunately, the banks didn’t forget to send the bill and the people became very worried when they couldn’t pay it. Instead of learning from their mistakes and learning how to handle credit, these people continued to try to make "deals" with the banks so they could keep on charging and put off paying the bills further down the road. It never worked. These people sunk into the abyss created by the banks until they were so far in debt that the only way out, the dishonest way, was bankruptcy.

Today it is the same, people seem to be immune to learning about credit. Actually, it is very simple. Let’s look at this simple example: your friend lends you a dollar. It is a loan, not a gift; you must pay it back and you agree to give him an additional five cents as a thank you for giving you the opportunity to have the dollar for a month. So, you agree with your friend that thirty days from now you will give him one dollar and five cents. That is your agreement; both of you know all the aspects of the deal. You take his dollar, spend it, and enjoy whatever you purchased with the money. Thirty days later your friend knocks on your door and says, "Okay, it is time for you to pay me my one dollar and five cents." You say, "right, I agreed to pay you this money." You reach into your pocket and produce the cash and you pay him back. Everyone is satisfied. You got the loan when you needed it and your friend is rewarded by getting the money back plus a small amount of interest. Simple enough, but people who are used to taking the easy way in life are also the people that feel that they don’t bear any responsibility. It is sort of a "catch-22". Irresponsible people always need the loans, and these same people feel that they bear no responsibility to pay it back. Really, if you can’t pay back, don’t borrow.

Your credit rating is the history of your borrowing over time. Anytime you have borrowed money, paid it back, or not paid it back, or were late paying, it is recorded in your history. When you want more money in the future, the bank will look at your credit history and decide whether or not to grant the loan. If your credit history is not so good, contact the credit agency to find out how to improve it. If your credit history is good now, keep up the good work!