By Martin H. Bosworth

Credit. It's one of the foundations of our consumer culture. Everyone knows what it is in principle -- you ask for something you need when you don't have the money to pay for it, and set up an agreement to pay for it later. Credit cards, bank loans, auto loans, home loansall of these transactions stem from that same simple foundation. Yet when it comes to truly understanding credit and how it works -- and how it can dramatically affect your future -- Americans are almost totally clueless.

You see it every day. Sometimes it's a horror story regarding a poor schmoe that ran up $60,000 in credit card bills, across five different cards, and had to declare bankruptcy before even beginning to pay them off. Sometimes it's that horrified expression you see in the mirror when you open your latest Discover card bill and find out you owe an extra $100 on a charge of $50, due to an unnoticed change in the creditor's terms. And sometimes it's that false cluck of sympathy from a bank officer who turned you down for a loan because of a mistaken charge on your credit report.

In a speech to the Jumpstart Coalition from April 2003, Federal Reserve Chairman Alan Greenspan remarked that "[c]ertainly, young adults have access to credit at a much earlier age than their parents did. Accordingly, they need a more comprehensive understanding of credit than was afforded to the previous generation -- including the impact of compounding interest on debt balances and the implications of mismanaging credit accounts Improving basic financial education at the elementary and secondary school level will provide a foundation of financial literacy that can help prevent younger people from making poor decisions that can take years to overcome."

And yet, we stumble along, blind lemmings being led by every catchy tune from banks, debt counselors, and credit repair agencies ... anyone who claims they can help us out of our bad financial straits. For a reasonable fee, of course.

In my struggle to fix my credit problems and build a real financial plan, I came across a plethora of useful information that simply isn't getting out to the general public, particularly the marketing goldmine of the 18-34 age brackets.

We're a generation raised on instant acquisition and the "buy now, pay later" ethic. "Why carry cash? I can pay with plastic!" is the cry, and it's answered by a slew of eager-beaver banks ready to make money off your spending habits.

In order to be a smarter shopper and a more informed consumer, you have to know what you're dealing with, what problems you may face, and how to fix them. Financial knowledge may not be sexy or edgy, but knowing all the lyrics to Ludacris' latest isn't going to win you a home loan, approve you a credit card, or pay off those late bills.

This article will review a few important things you can learn regarding the world of credit, and your place in it.

Next: Credit Bureaus -- Who You're Dealing With