Good credit is a precious thing to most ordinary mortals, who cannot afford to pay cash for a house, a car, a refrigerator, TV or baby carriage. People in business realize that credit must frequently be extended to customers in order to generate sales and eventual profits. Indeed, many businesses abhor cash buyers, preferring to sell merchandise and services on credit in order to reap much higher profits from the relatively high rates of interest they can charge.

This is all well and good on both sides of a transaction, as the buyer may only be able to afford an item by paying smaller periodic payments over time, whereas the seller profits both from sales which might not otherwise be made plus the interest received on the outstanding balance due.

A word of caution, however: self-discipline is nowhere more important than in maintenance of your good credit. Miss a few payments and you may well end up with a record which raises a red flag when a potential new creditor looks at your history. Your latest "nice-to-have" or even "must-have" item may be unobtainable without the cash to pay for it.

Credit is easy to come by when you have plenty of tangible assets and a solid income stream. No doubt you have already noticed that lenders of all kinds just love to lend money to folks who don't need it. For those who are not so fortunate, my advice is to start young and use credit, but use it carefully. Never, ever, make a late payment; your credit history will build slowly but surely. Then, when you really need to borrow serious money for something very important, you'll be considered a good risk and find an easy path to obtaining the loan you need at a reasonable cost.

Plastic deserves a special word of caution. Most of you will continually receive pre-approved new credit cards almost weekly. These typically offer a ridiculously low rate for several months and then jump up to some rate tied to the prime rate which will usually be somewhere around 20%. As many have learned, this is a vicious trap which will eventually suck you into the depths where your only out may be bankruptcy. That may save you once but just wait until you try to get a home mortgage or some other serious amount thereafter. Your formerly friendly lenders won't touch you even with someone else's ten-foot pole!

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