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Credit allows you to buy now and pay later based on the trust that payment will be made in the future. Having credit is important because it typically determines how much you will be permitted to borrow, for what purpose, for how long and at what interest rate.

It also shows the level of "confidence" lenders have in potential borrowers. This depends on many factors. Some of those factors include:

• Your income as indicator of the ability to repay debt in relation to debt acrued
• The amount of borrowing you have done
• How well you have handled repayment for debt

Credit can have a major impact on your future. Bad credit can suggest you are a risky bet and may impede you from being able to make major purchases (such as a car or home) later in life. This could impact interest rates available to you when you try to borrow a loan.