It is essential to build a credit history early – as early as finances and maturity allow. Even if credit history cannot be maintained at "excellent," some credit history is better than none at all when it comes to making essential decisions and purchases.
Loan institutions will only begin to take credit history seriously after it is 7 years old. If you go to purchase a house, car, or other large, essential item, having a long credit history is in your favor.
If you do not have any credit history (and the older you are) the harder it becomes to start to establish credit history. Students and young adults are barraged with offers to open up credit card accounts. Those who do open up one or two major credit cards are doing themselves a favor. Those who refuse will find it even more difficult down the road to even acquire credit card accounts with low limits.
This becomes more of a burden as the person realizes that the time has come to make a major purchase, like a house. Someone with an established credit history will have lenders willing to offer loans to them. Those with no credit history may find themselves unable to purchase a house that meets even the most basic standards.
If you have no credit history, you will be seen as a risky investment to any lender – even phone companies who have notorious problems getting people to pay their monthly bills. A basic credit check that does not show any activity will not give lenders a basis on which to make their decision to lend to you. If they have no basis, they cannot quote how much they are able to lend to you. This becomes a cycle that is hard to beat, especially as your life, and the essential items it requires, keeps making demands . . . but your credit history maintains a blank slate.
While it might have been smart in the past to maintain a cash-only lifestyle, it becomes increasingly more important to establish good credit early. The financial system is based upon credit, loans, debts, and the ability a person has to pay back their debts. The system has evolved this way whether individuals agree with it or not . . . and you just can’t beat the system. It’s in your best interest to accept it and start building credit history as soon as possible.