Here’s how credit used to work in olden times. You had a small property, a nice middle-income household, in a little town. You also had a name. It was a good name. You could use your good name anywhere, to help you get stuff. You’d head on over to the general store and say, “I need a pound of nails,” and the shop owner would hand them over.

“Oops,” you’d say. “I seem to have left my wallet (or coin pouch, or whatever they had back then) at my rustic lodgings.”

“No problem,” the shopkeeper would say. “I know you’re good for it.”

You’d come back in the next day with the money for the nails, the shopkeeper would be happy, you’d be happy, and the next time you forgot the money for a purchase, he’d let you do the same thing again. You had credit with the shopkeeper.

If, on the other hand, you took your pound of nails and then studiously avoided the shopkeeper for the next year, you did not have credit with him. If you paid him back little by little, you might still have a bit of credit with him, but he’d be pretty apprehensive about letting you walk away with anything big. He can afford to wait on the price of a bag of nails, but probably not on a bolt of cloth or something. (Bolts of cloth were expensive. Trust us.)

Since it was a small town, everyone else in town knows what the shopkeeper knows. If you’re a fellow who always pays his debts promptly, all the shops in town are happy to give you credit, because they know you won’t leave them holding the bag. If you’re a fellow who charges things and never pays them back, or pays them back veeeeeery sloooowly, those other shopkeepers are not big on the idea of giving you credit in their shops.

Sounding a little familiar?

This is pretty much how credit still works. If you have three credit cards and a solid history of paying off your debts every month, it’s not that hard to get credit with other people, like a bank for a home loan. If you have three credit cards and a solid history of not paying your bill regularly, or only paying part of it, it’s hard to get anyone else to give you credit, because they think you’ll just do the same to them.

True, we don’t have the small-town system where all the shopkeepers whisper to each other about the dangers of loaning you money. We do have the internet, though. That just means more shopkeepers all over the world get to hear about what kind of fellow you are. If you’re the sort of fellow who doesn’t pay his debts, that means an awful lot of unsympathetic shopkeepers.

The one thing that’s changed significantly about credit debt from the first days of credit to the modern day is the repercussions for having bad credit. In the old days, if you had a huge list of debts and no way to pay them off, it was entirely possible that someone was going to come around and beat it out of you (old school credit repair)

We’re a lot more civilized now. Now, they’ll just charge you a ton of fees. It still hurts, just in a different place.

So what’s my point?

When you have credit, think of it as though you had a debt to a real person. Trust us, it helps a lot. If you still owed a good friend of yours money after three years, you’d be feeling pretty ashamed of yourself. You don’t feel the same way about your credit card debt because . . . well, it’s a credit card. It doesn’t have feelings and it can’t make you feel guilty.

It still has the same effect on your good name, though. Credit card companies will still report to other companies, and eventually you’re going to be looking across the table at a real, live human being who’s going to tell you that your credit isn’t any good there. It’ll be a home loan officer, or a car dealer. They won’t trust your word that you’ll pay them back.

That’s not a situation we want you to be in. So get your good name back. If you need some help on that score, give us a call.