© Elliot Essman 2005. All rights reserved.

These pages contain the complete 2005 revised text of Building Yourself, public speaking trainer Elliot Essman's guide to living the successful life.

Elliot Essman Public Speaking Training
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• Neither a borrower, nor a lender be;/For loan oft loses both itself and friend/And borrowing dulls the edge of husbandry. William Shakespeare (1564–1616)

Some people think credit is hard to understand. This is not so. You have to learn just three things about credit: how to get it; how to keep it; how to use it. All three of these aspects are related. You can repair credit if you damage it, but it's better to avoid that stage entirely.

Fact number one to remember about credit: credit is administered by clerks. The clerks use computers. The clerk is capable of very little creative thought. The computer is capable of absolutely no creative thought. The information the clerks and computers demand may not make sense to you, but it makes sense to them. They're the gatekeepers of credit, so you'd better not strain their intelligence.

Take the question of paying bills on time. There's no moral reason to be particularly quick to pay your bills. But when the computer at the credit rating bureau makes a negative check on your file, it's not making a moral judgment. When a clerk somewhere sees that negative check on your credit applica­tion, he or she makes no judgment either. As any good book on credit will tell you, these clerks have a scoring system. Too many negatives and you don't pass. Don't take it personally.

That's reality; you make a grand mistake if you think it will ever be otherwise. If you play by these simple rules and don't fret about what cannot be, you can make the power of credit a potent ally.

Getting your first credit is simple. You start small, pay your bills, then work up. Maintaining your credit rating is a matter of keeping your nose clean, then checking with the credit bureaus every now and then to make sure their information on you is accurate.

Using the credit properly is the hard part. The first thing to remember is that the credit is not your money; it's money someone else wants to lend to you at high rates. When you buy a house or a car you can often get good rates because the lender is secured by what you're buying. You also have some security yourself; if you cannot pay, the item will be sold to pay off the debt.

Credit cards are a whole different story. They're unsecured. Even credit cards with “low” rates cost too much. The card companies also have clever ways of calculating what you owe that can cost you a great deal of money. They offer low minimum payments so they can earn as much as possible in interest on the balance you keep with them.

Credit cards are wonderful for convenience. You get several weeks worth of free use of money with many of them. But if you can't pay off the full balance when you get the bill, you should seriously reconsider the purchase. You don't get anywhere by buying things you can't afford—at interest rates that bleed you dry. If you simply can't do without the item, go out, earn some extra money and pay cash. If you maintain ongoing balances on credit cards, you're financing your personal life in the most expensive possible way.

The key to credit then is to open it, then to build it carefully. Make it grow. Keep it clean. Recognize the traps of credit and know that clerks and computers have no pity. Stay ahead of credit and it'll become your lifelong friend.