Why is credit history important?

It actually does. Your credit history is a crucial part of your financial journey. Your credit history and credit score will determine the interest rates you pay on mortgages or even credit cards. 

In fact, it's not just about applying for credit. Your credit history matters to your employer, landlord, insurance company, and even certain service providers. A negative remark on your credit history makes you, somewhat, less desirable.

It is quite common among employers to check their employees' credit history, and even make it a part of the regular hiring process. Similarly, a landlord will check your credit history to ensure that you pay your rents and other bills timely before letting you in the property. 

Your credit history dominates every part of your life, so make sure to maintain a healthy credit score. Check your credit report at least once per year. You can get one free annual credit report from each of the three major credit bureaus. 

Hi!  Advisor Fomichenko gives good advice here. Credit and credit scores have become somewhat tyrannical in our society. By way of explantion, to briefly define  terms, buying on “credit” means buying an item or service that you take home as your own while promising you’ll pay for it in the future.  There is a fee for doing that, and it’s called “interest.” The interest rate is the amount that is charged by the lender as the cost to you for lending you the money. Interest rates vary based on the type and originator of the loan, in addition to many other factors. Businesses don’t work for free, and the service of lending money has to have a cost that is charged to the borrower that in turn makes money for the lender. The lender is in the business of lending money and needs the return of the money lent plus the revenue of the interest rate charge to be profitable.

If you have good credit, borrowing costs you less.  Home mortgages, auto loans, personal loans, low interest rate credit cards, and the ability to get credit cards with temporary 0% balances are available to you in a way they won’t be if you don’t have good credit. When your credit score is low, getting any loan is tougher and more expensive…or impossible. So not having good credit can cost you a home or car; it can make you pay more for using credit cards or prevent you from getting them; or it can drive up the interest rate of a personal loan. It can even keep you from getting a job you want because employers are allowed to check your credit and use it as a factor in hiring you. 

So it's worth it in many ways to do your best to pay your bills on time and to pay at least the minimum due.  When you can't pay, call the lender to see if new terms can be worked out with payment plan to try to protect your credit score.

Thanks for writing!