Do you think that credit cards are the miraculous invention of late only? If so, you are no doubt mistaken. Since the 19th century people have been liable to buy things on credit and such thing as a credit report played a significant role for merchants in their lending decision.
Of course, there were no credit card applications yet in the form that they are today, equally, you would never find credit cards with rewards or special programs but the essence of credit, namely - buy now, pay later - was extensively practiced already. And in the credit lending procedure, your credit report was examined much the same way as it is done today.
Now, can you say for sure what makes your credit card application more predisposed to approval? What did 19th century creditors pay attention to and what do today's lenders search for to make out whether you are a good credit risk or not? They all look at your credit worthiness and your willingness to repay your credit.
Thus, the terms of the 19th century loan and the features of the modern credit card have been largely dependable on this sort of information contained in your credit report. Any potential credit card applicant should closely watch his credit report and keep it in a good state if he means to qualify for best term loan or lowest APR credit card.
Let's dig into the history on credit report and trace the regularities that has been preserved up to the present day and that still influence your creditor's decision.
Imagine it is, say, 1835 now and you go to your local store. If you don't have enough cash with you, you normally make your purchase on credit. The fact that you, so to say, apply for credit as well as the cost of the credit itself, is recorded on a piece pf paper that is placed into a paper tube. This information is attached to you wherever you go and identifies you as a potential debtor to merchants.
But time goes and progress never keeps you waiting. Let's admit it, carrying paper tubes about you is sort of inconvenient and one day someone had an idea of collecting all the information from your piece of paper into one document - credit report, in fact.
The ultimate picture of your credit report influences your credit score which is actually the main tool to determine whether you can be granted credit. That is how it went in the 19th century and how it works today. If the credit score built up of credit report data meets the requirements of the creditor, you are a good candidate for credit.
There is one important difference though and it really affects your eligibility. The information stored in the 19th century credit report was mostly of negative character and included data intolerable in today's reports. It reported about your driving license and even your criminal record.
What's more the information had no verification to be correct and there was no single source of reporting it. No doubt, this sort of information only added more to bad credit than to good one.
It's natural that this way of making credit reports proved itself inefficient and the urgent need to put everything in order led to the establishment of the first modern credit reporting agencies. The credit reporting agencies collected all the information about the customer, not only bad records, excluding the following items which are judged as irrelevant in identifying you as a credit risk:
- Your criminal records;
- Your race and religion;
- Your health;
- Your income;
- Your driving license.
This way, you could expect to get a most fair picture of your credit report and your credit score and so - qualify for a better term credit or credit card.
Now you see that creditors of all times want to be sure in one, most important thing for them - your creditworthiness and reliability - and they find it in your credit report.