When lending money to borrowers, financial institutions often require that people secure credit. One of the reasons why this is the case is to reduce the risk.
If a borrower is able to secure credit, it usually means that they are financial responsible as determined by a third party. This usually includes an examination of the credit history. A credit history indicates how many accounts a person possesses, whether or not they have a good history of paying bills on time, and whether or not they use a significant percentage of their secured credit. All these factors play a significant role in securing credit.
