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Credit is essentially borrowed money. When you use a credit card or take out a loan, you are agreeing that you will borrow money now and pay it back later.
In addition to helping you make larger purchases, you need to use credit in order to build up a credit history.
In order to establish a good credit history, you'll need to make sure to pay your rent and bills on time, and keep your debts low. Paying off your debts is the best way to maintain good credit.
If you have poor credit, you'll have a harder time borrowing money.
Having poor credit can limit the choices you can make in your life.
Learn all this and more in Understanding Credit.