What Is a Credit History Used For?

A person's credit history provides information about his reliability. A credit history request does not always follow an application to borrow money, although that is its main use. The credit history is useful in any situation where the person is responsible for cash or property that belongs to someone else. The electric company may request a credit history even though a homeowner must pay his bill at the end of each month.

Utilities

Utilities often require a credit history to determine whether a homeowner is likely to pay her bill on time. If the homeowner has a poor credit history, a utility such as the water company may require her to provide a deposit that will cover the water bill for several months. The water company might ask for a smaller deposit from a customer with a high credit score, according to the Consumer Federation of America.

Auto Insurance

An auto insurance company uses credit history both to judge whether a client will pay her auto insurance premiums promptly, and predict whether she is likely to cause an auto accident. A high credit score provides evidence that a driver is responsible, so she may perform other responsible behaviors such as driving under the speed limit and taking her car to the auto shop for regular maintenance.

Landlord

An apartment manager frequently asks a prospective tenant to provide his credit history. The apartment manager needs to predict whether the tenant will pay for the damages if he accidentally breaks a window or knocks a hole in the wall, as well as whether the tenant will pay the rent on time.

Employer

An employee uses her employer's property to perform her job. A bank might request a credit history from an applicant for a bank teller job, because the bank teller distributes cash to the bank's customers. The bank wants to make sure that the teller does not have an incentive to steal cash because she has large, unpaid bills.

Illegal Use

A credit history can not be used to conduct sexual, religious or racial discrimination. A business that asks an applicant for her credit score should be able to show that the applicant's credit history is relevant for a business purpose, and that it asks for a credit history from any applicant in similar circumstances, to avoid the appearance of discrimination.