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Credit There is No Mystery

Joseph M Sabol

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Credit is one of the most important financial needs in our lives. Our economy runs on credit. With credit we can purchase goods and services as we need them, making our lives more enjoyable and rewarding. Without credit we must do without until we have saved enough money to purchase what we need. This is sometimes very difficult, as what we need often comes before we have saved the money.

What is credit? Credit is when someone agrees to give you goods or services for a delayed payment. A charge is made for granting a delayed payment. This charge is known as interest or carrying charges. Credit is used for borrowing money and purchasing goods or services. When you receive something on credit, you are agreeing to pay a set monthly amount until your debt is paid in full. This monthly payment includes the original cost of the goods or services plus the interest or carrying charge.

Different companies have different fees and policies when they extend credit to you. Always fully understand the credit terms of a company before accepting the credit card from them.

The most basic form of credit is the credit card. A credit card can be issued by a bank, an oil company, a department store or by any other company offering goods or services. Credit cards are offered free by some companies such as department stores, while some credit card companies, like most banks charge an annual fee.

The first time most people start to think about credit is when they have gone into the working world and desire to obtain goods or services based on their ability to pay the monthly payment from their salary. The paradox of credit is that you cannot receive credit without a good credit history and you cannot establish a good credit history unless someone is willing to give you credit. Does this mean you are caught in a Catch 22? No, not by any stretch of the imagination. There are ways to break this vicious cycle!

The first step in establishing good credit is to open a regular savings account and a checking account. Needless to say, you must NEVER bounce a check while trying to build or re-establish credit. You must learn how to use the banks because the banks are what make the credit world go around. When you first start working, set up a savings plan. Develop from the very beginning the habit of saving money for emergencies (oh and they WILL OCCUR) or something you may want to purchase in the future. A small amount deposited regularly into a savings account over a period of time is more impressive to a banker than irregular large deposits that total the same amount. Regular deposits show a stable, conservative individual who is planning ahead and knows how to handle money.

After you have established yourself as a good customer of the bank and your savings account is established, apply for your first credit card. You must also be employed for at least a year in your present position and have an established residence for at least 3 years plus a salary in the range of $18,000 or over. If you get rejected, do not feel bad. There are other ways to get a credit card. There are 2 types of Visa and Master Cards, secured and unsecured. The easiest way to obtain a credit card is the secured credit card. It does not matter whether it is a Visa or a Master Card. A secured credit card is a credit card that is “secured" by a savings account. The savings account collects interest for you but you cannot withdraw the funds from it as you would a regular savings account. Instead you use the Visa or Master Card for making purchases or cash advances as needed up to the amount of your credit limit, which is the value of the savings account.

The credit line for your secured Visa or Master Card is determined by the amount of money you have in your secured savings account. You can increase the credit line of your credit cards by making a deposit into your secured savings account. The more money you deposit into your secured savings account the larger your credit line will be!

If I might take the liberty to stray from here for just a few minutes, I want to share with you a little known strategy for obtaining a bank loan using the same ideas presented in obtaining a secured credit card. This is so obscure that even bank managers do not always know about this. This idea is known as share loaning. It is very simple, quick and usually does not involve qualifying for credit. The bank will probably run a credit file on you to see if you're a convicted felon because what I am about to tell you had a bank call the U. S. Secret Service to verify that this could be done. That is a true story! It is so simple, but people who are brought up in the world with the same ideas as everyone else and taught the financial ideas from their parents, who themselves do not really know, the ignorance continues until someone breaks the cycle. Share loaning is nothing more than putting money into a statement savings account and turning around, using the money in the statement savings account as collateral for a bank loan. That is how simple it is.

Joseph M. Sabol is a world class Doberman breeder. Please go to or to for further information


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