It’s down to two. You’ve vetted a long list of contractors. Wheat has emerged from chaff. Now the final decision gets tough. Each contractor appeals to you for different reasons. They’re almost identically qualified, with one difference: one’s licensed, the other isn’t.

Questions float through your head: What does it really mean to be licensed? Why are some contractors licensed and others not? And the ultimate question: Does it matter?

You’re not alone in your confusion. Contractors feel it, too. Licensing rules vary state to state. Most states require a license for at least a few home-improvement trades, some don’t. Some cities and counties require additional licenses, some don’t. Some states and municipalities strictly enforce their licensing laws, most don’t.