I prefer to have a solid background before I start. I want to know who my character is, what does it want, what is it afraid of. It helps to craft my decisions in game. It also helps if I have links into the world - I know where my home is so if there are giants nearby I'm going to be concerned, I know I have relatives in that city so I would push on to get there so we can have a nice place to stay that is not an inn etc'.
To each their own style of play of course but I think that if you do not know who your character is it'll be a bit hard for you to know how to respond top other players and what they are doing.
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It is not that I don't know my character, it is more that I know it in vague detail that I can't even put in words. I just create the details as I go. I am not saying that very detailed backgrounds before you start is bad, it is just that I prefer my style :)