Rhetorical discussion here:

What purpose does having credit fulfill, besides giving lenders and idea as to if and how much they should lend to you?  I hope this makes sense, and that this idea is tolerable enough to discuss.

Dave Ramsey says in his book The Total Money Makeover

The best myth is the "build your credit" myth.  Bankers, car dealers, and unknowledgeable mortage lenders have told America for years to "build your credit."  This myth means we have to get debt so we can get more debt because debt is how we get stuff.

I think it's a valid point.  So...  Do we really NEED credit?

I pretty much agree with Dave Ramsey's comment.  For a good many things, I do not think we need to have credit if we would discipline ourselves and save up for things little by little.

Look at what is happening to the housing market because of some of these loans that have been given out to people  who are less than credit worthy.  Credit has become such a part of the warp and woof of the economy that, to significantly do away with it, would severly effect the economy.

Short answer is No - We don't need credit at all

The long answer is, yes - We need credit if we need to borrow money to go into business, buy a house, buy a car, take vacations, etc...  But if you're the type of person that can save up in advance of needing funds for things like that, then credit is worthless, as Dave Ramsey suggests.

My guess is that this myth has been perpetuated by the lending industry more than anything as a tactic to increase profits.  The devastating part of it is that it WORKS!  By aggressively promoting such options to the average consumer, we often can't help but fall for the trap and convince ourselves that we can afford things when we really can't.

Over time, houses and cars have increased exponentially for consumers even with inflation considered. We are forced to take out higher loans for these essential items and then are forced to borrow for items that should really be saved for.

Unlike the mortgage industry to an extent, credit card companies can easily jack up interest rates if someone doesn't pay.  If the CC companies loose lending practices actually cost the company money (kind of like the sub-prime mess), it would tighten up its lending standards and folks that really shouldn't be borrowing would be cut-off, encouraging the average consumer to save instead.