BY NATHAN SPIECKER for WEEKLY VOLCANO | 8/7/2026
When Marcus found an apartment he could afford, he thought the hardest part was over. He had a steady job, enough money saved for the security deposit and good references from previous landlords. Then the property manager asked for permission to check his credit. Marcus hesitated.
“I’ve never missed a rent payment,” he said. “Why does borrowing money have anything to do with renting an apartment?”
It’s a fair question and one that many of us have asked ourselves. For some, the word credit immediately brings to mind debt, collection calls or bills we’d rather forget. Others think of a three-digit credit score that seems to judge whether we’re “good” or “bad” with money. After hearing those messages for years, it’s easy to understand why so many of us feel anxious whenever credit comes up. But those ideas only tell part of the story.
Before we spend the next several weeks talking about credit reports, credit scores and borrowing, it helps to answer a much simpler question: What is credit?
At its most basic level, credit is trust. More specifically, credit is an agreement that allows someone to receive money, goods or services today with the promise of paying later. When a lender approves a loan, when a credit card company opens an account or when a utility company sends a monthly bill after electricity or water has already been used, they’re extending credit. They are trusting that the promise to pay will be kept.
Notice what isn’t part of that definition. Credit is not the same thing as debt. Debt is the money owed after borrowing or using credit. Credit is the ability to borrow in the first place. The two are closely connected, but they aren’t interchangeable. Someone can have access to credit without carrying debt. Someone else may owe money but have little ability to borrow more. Understanding that difference makes many financial conversations much easier to follow.
For much of history, lending worked differently than it does today. In smaller communities, the person deciding whether to lend money often knew the borrower personally. A local banker, merchant or shop owner might know where someone worked, how long they had lived in town, whether they had a reputation for paying their bills or whether neighbors considered them dependable. Those personal relationships often mattered as much as financial records.
As communities grew larger, people moved more often and financial institutions served customers they had never met, those personal relationships became less common. Lenders still needed a way to answer an important question: How likely is this person to repay what they borrow?
Rather than relying on personal familiarity, the financial system gradually developed a way to document borrowing history so lenders could make decisions using more consistent information. That doesn’t mean the system is perfect, and later in this series we’ll discuss both its strengths and its limitations, but it helps explain why credit reports and credit scores exist in the first place. They’re attempts to measure lending risk, not personal value.
That distinction is easy to say but much harder to believe when we’ve been told we have “good credit” or “bad credit.” Those phrases are so common that many of us begin to think they’re describing us instead of describing information in a lending system. But we all know that life doesn’t work that neatly.
People lose jobs during economic downturns. Families face expensive medical emergencies. Small business owners experience slow seasons. Parents reduce work hours to care for children or aging relatives. Military families relocate. Natural disasters interrupt lives with little warning. Financial setbacks happen for many reasons, and they don’t erase a person’s character, work ethic or potential. A credit history reflects financial events. It does not measure honesty, intelligence, generosity or whether someone deserves respect.
That doesn’t mean credit should be ignored. It can affect whether we’re approved for a loan, the interest rate we’re offered, the deposit required to open certain utility accounts or whether a landlord asks additional questions during a rental application. Those are real consequences, and understanding how the system works helps us make informed decisions. But it’s equally important not to give credit more power than it deserves. It is one system designed for one purpose: helping lenders estimate risk.
If you’ve never really understood how credit works, you’re not alone. Most of us were never formally taught about it. We pick up bits and pieces from family members, advertisements, television, social media and conversations with friends. Some of that information is accurate. Some of it is outdated. Some of it is simply wrong. That’s why this series begins here.
Over the coming weeks, we’ll explore what a credit history actually contains, how credit reports and credit scores differ, how to build credit responsibly, what to do if something on a report is wrong and how to make informed decisions when borrowing. We don’t need to become experts overnight. We simply need to understand how the pieces fit together.
This week’s action is simple. Think about one thing you’ve always believed about credit. Maybe you’ve assumed credit and debt are the same thing. Maybe you’ve believed that a low credit score says something about who you are as a person. Or perhaps you’ve accepted a piece of advice without ever questioning where it came from. Take a few minutes this week to compare that belief with information from the Consumer Financial Protection Bureau’s credit basics resources. You may discover that what you’ve always assumed isn’t quite as accurate as you thought.
Next week, we’ll take the next step. If credit is built on our financial history, what exactly is a credit history, and why does it matter?
This column is produced by the Washington State Department of Financial Institutions, Washington’s financial services regulator, to provide consumer education and protection. Learn more or file a complaint at www.dfi.wa.gov.
