Learn About Credit - What Are Credit Reports

Years ago, you didn't need to learn about credit. The only credit that you could get was maybe an account at the local store where you could buy something on "time." This meant that you had to sign an agreement to go to the store each week and pay towards the item. This first began in the early 1950s. It was around that time, after WWII, that it became more common for people to buy a house. The GI Bill helped a lot of returning vets buy homes. Prior to that, mortgages were practically unheard of.

By the early 1970s, stores were using credit cards. This replaced the simple agreements and made purchases easier. Stores billed customers monthly which customers then paid for the bill with a check. By the 1970s, people were using checking accounts to pay their bills, although there were still some people who walked down to the store to pay their weekly accounts.

Universal charges, such as Visa and Mastercard, were not commonly distributed until the late 1970s. They were very difficult to get. You had to have excellent "credit." This was established through a mortgage, car loans and store charges. Many people had mortgages by the 1970s as well as car loans. Americans were beginning to enjoy using credit. Many people applied for and got the universal credit cards.

Prior to the 1970s, banks would base your credit worthiness on your character, how long you had been at your job and personal references. When universal credit cards came into place, it became apparent that a better system had to be put into place to be able to determine credit worthiness. Thus, credit bureaus were born. TransUnion was the first credit bureau. They began issuing credit reports to creditors about clients. When clients complained that they had the wrong information about them on a credit report, it fell on deaf ears.

The government wanted to encourage people to use credit and spend money. So they allowed people to write off the interest that they paid on their credit cards on their income tax. They allowed this until the early 1980s at which time they no longer enabled this to be deducted. By this time, most people were used to using credit.

With the advent of the internet, people became even more credit conscious. They began checking their credit scores and borrowing even more money. A lot of people ran into trouble with all the credit they were given. It was hard to believe that Visa and Mastercard, once so coveted, were now so available. Bankruptcies began to be very common.

By the year 2003, the bankruptcy laws were changing and Americans were totally reliant on credit. Most Americans carry about $5,000 in credit card debt. Credit reports are now something that everyone is entitled to receive and dispute.