When you think about it, consumer credit seems in many ways to be a self-fulfilling prophecy. As more people utilize it, more merchants come to the conclusion that they need to accept it. And, as more merchants accept it, more consumers tend to use it. That would explain why in today's marketplace everyone seems to want to offer credit. Many store employees have been trained to ask if you'd like to open a charge account whenever they see you attempting to pay by cash or check. This steady bombardment of credit opportunities tends to have a cumulative effect on the way that we buy things. Let's take a look at one excellent example of this creeping influence: the automobile industry.

Throughout the 1960s, most Americans paid cash for their automobiles. If a person did borrow money to buy a car, he or she would usually make a large down payment (often up to half of the vehicle's purchase price) and carry the balance on a one- or two-year secured loan from a local bank. But in the 1970s, automakers decided to get more involved in the purchase financing of their own products. They began marketing two- and three-year loans that required smaller down payments.

Along came the Eighties, and car companies began leasing cars, effectively eliminating the down payment altogether. (Also put to death at this time was the basic notion of the automobile as a possession that is bought and kept for many years.) Leasing furthermore made luxury cars more affordable to a much larger market of consumers. Initially, lease contracts typically came with two- or three-year terms. To compete, traditional loans lengthened their standard terms to four or five years.

By the start of the New Millennium, the vast majority of Americans were financing all their new car purchases. Two-year auto loans were, for the most part, a thing of the past; five-year loans and leases had become the norm, and six-year financing was increasingly commonplace. Luxury vehicles – which expanded to include some trucks and SUVs – ballooned from less than ten percent of the automobile market to almost a third.

The cumulative effects of these events on our society can easily be seen: higher prices and levels of luxury but less outright ownership. Some consumer advocates criticize this process as creating a permanent debtor class; others, however, defend it as bringing the lifestyle of the wealthy to a much broader market. But whatever the sociological concerns, there's no doubt that a credit economy such as ours requires its citizens to pay careful attention to their ability to obtain credit. It's therefore extremely important for every consumer to be wise about his or her credit habits and money management techniques, because they will have a direct effect on the primary way that lenders measure creditworthiness: your credit score.

Since your credit score has a direct bearing on how much you pay for credit, improving it can help you save a substantial amount of money. For example, people with great credit scores (700 and above) can pay literally tens of thousands of dollars less – over the life of a 30-year mortgage – than people with just marginal credit. Your score can also affect your ability to get a job or insurance. That's because insurance companies and even potential employers may check your credit history to determine your level of personal stability.

If you don't know what's in your credit file or what your score is, find out. Get a copy of your credit report. Then, if necessary, take steps to improve and strengthen it. Over time you'll begin to notice the difference, and so will your wallet.

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