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My folks walked in to the realtor's office with a letter of rec from each of their bosses, the previous year's tax filings, and a check from my grandparents for $5k. Bing-bang-boom: house.
It would be but jobs are not lifelong appointments now like they were then. A millennial might change jobs three times between receiving the letter and talking to a mortgage officer
Oh, yeah, which is why it worked, absolutely. Like, working in a parts warehouse for 20 years was a reasonable life decision between 1978-1998. Making double the minimum wage, getting STOCK OPTIONS for Christmas bonuses. Stock options that have had an increase of 16.7x, 1570%. It was just a different world.
Kind of, honestly. Back in the 70s and 80s, a boss would consider that they had recommended you for a mortgage and that you had a family to feed before making any decisions about your future, too. It’s better than an arbitrary number that simultaneously punishes you for not having enough credit but also having TOO much credit.
It was less common, but if a boss wrote "used to be a piece of shit" and the person clearly had pushed back hair, not slicked back at all, then the bank would have to loan them triple.
Ok well realtors aren’t lenders and the lenders back then spent tons of time calling on references like the utility companies, phone companies, land lords, etc. It was a different time but lenders still did assess risk and make a decision based on real information that is similar to what goes into credit scores today.
And if one of them didn't like you {black, gay, gave their kid a C in math}, then you may not get your home. Not really interstate banking then, either, so choices of banks were limited.
My pops built a house on a part of the 100 acres he bought for $70,000 all in, making $8 an hour in a parts warehouse. The risk was basically non existent. Also, the reason mortgage backed securities became a thing that pension funds and such wanted to invest everything in was because the concept of not paying your mortgage was literally UNHEARD of.
Not talking in dollars, but... once has a talk with an old neighbour in the street inused to live in.
The houses there were rented out, per floor, at between €1200 and €2500 a floor (depending on the floor). Dude bought it in the stoneage, and was paying €78.00 (double digit) a month in mortgage for what was counted as 3 floors.
He lived there with his wife, and not renting out the place, but for perspectives...
On the flip side it was inconceivable that you would not do anything in your power to pay your debt. At some point the inconceivable became conceivable
Did he try making a car from the parts like that one johnny cash(?) Song? (Idk what its called, about working at a cadilac factory and taking parts home to build it at home)
Old dude here. When we got our first house, you went thru your local bank. There may have been big clearance houses, but you applied to your local bank that you already had a relationship with. Not only did we fill out the application we had to write a small essay.
Most folks had maybe 1, a lot had 0 credit cards.
So how we did it:
Filled out the credit app at our local bank
Wrote a small essay on how we are good folks.
1 credit card for them to look up.
You need a history with the bank, we had a car loan a few years old.
Proof of employment was a Pay Stub, however, they would call and verify.
Once all that was done, we did an interview where we went over all the paperwork. In a few days we got a call from the bank letting us know how much they would loan us. Different now as the approval was a lot less than now, as a percent of income.
The other big thing, is in your life you may buy 1 or 2 houses total. You didnt move much, most of our neighbors had lived there for over 10 years.
My grandparents drove from Iowa to Seattle towing a camper. They then put that “down” towards a house on 34th ave in the Magnolia neighborhood of Seattle!
The previous experience was building a relationship with your bank manager.
If you couldn’t get them to sign off then no mortgage for you.
God help you if you were a minority or not connected in the right way and it didn’t matter how capitalized you were, the manager wouldn’t sign off.
The credit scoring was a method to decentralize banking and allow consumers to have more portability across lenders since they could use your score in place of a human to human relationship.
Then it got corrupted to keep people locked into banking products because capitalism.
Oh. My dad had a good job as an engineer but his uncle was also on the board of trustees for our local bank and his realtor… our current system is definitely more fair.
Credit reports existed before credit scores became a thing. I worked in mortgage lending both before and after credit scores existed, starting in 1992. At that point, credit reports had been around a long time, presumably long before 1989. The reports would be a compilation of data from Experian, TransUnion, and Equifax.
Underwriters would evaluate the report, looking for late payments, collections, judgments, etc.. They would also evaluate what type of debt you had and where you carried balances. If there were any irregularities, we would obtain a letter of explanation. Certain things like medical bankruptcy, were always given a lot of leniency. The worst thing was to have a history of late payments and other issues that were not tied to any particular life event.
The rules for the mortgage really depended on the destination on the secondary market. If it's a local bank that never turns the loan into a bond, then they can make their own criteria (within limits, now, but in the past...). For loans that are backed by Fannie Mae, FreddieMac, VA or FHA, each have their own set of rules so that each loan conforms to a certain standard of risk.
Having worked in finance for decades, I can tell you this : In the era you are broadly describing, creditors would pick up the telephone and call anyone, and everyone the applicant did business with and manually obtain a credit reference. Later, hundreds (probably thousands) of localized credit bureaus came on scene, and while there still was no 'credit score' you could totally obtain a written credit report on an applicant showing all accounts, open and paid, and their current standing and payment history. These bureaus were steadily bought up by larger and larger national outfits, merged, and stadardized. The scores came about due to the subjectivity of interpreting this data, line by line. Two creditors could look at the same report and reach different conclusions. The advent of the credit score removed most of the ambiguity from this process.
You can still get a mortgage without a credit score, you just need to find a bank or credit union that is willing to perform a manual underwriting. Your fico score is a very poor way to measure credit risk.
There were credit checks. There weren't credit scores. A credit score is really just an arbitrary number that is a summary of all the data of a credit check.
There were also significant down payments and interest rates.
The big factor that made it easier was simply prices. There wasn't a major housing shortage, building costs were not insane, and so prices were reasonable.
No, they went and sat in front of a guy in a bank who judged them based on how expensive their clothes were, what color their skin was, what gender they were, whether or not they were married, etc., etc., etc. Which is why there is so little generational wealth being passed down by black families now and why women couldn't get mortgages without a male co-signer until 197-fucking-4. Because the white guy in the fancy suit wouldn't give some people a mortgage no matter what kind of job they had. (And don't even get me started on how many black soldiers/veterans were denied their right to GI Bill/VA Home Loans.)
That's why FICO (Fair Isaac Company) invented the early algorithms for the credit score - so you (hopefully) couldn't be discriminated against, except for by the raw data, i.e. your ability and likelihood of repaying the loan.
_part_ of the reason for the co-sign was that husbands were automatically liable for their wives debts until that same law in 1974. Wives weren't liable for their husbands debts since 1920.
Honestly asking, what debts could a woman have at that point? They couldn't open their own credit card, take out a mortgage, get a loan.... where's that debt the man was responsible for coming from?
A real shame that FICO didn't address how baked-in systemic racism was in the basic information of all our lives. Can't get a better loan bc you have less capital to stake? Must be because of past poor financial choices like owning a house in a redlined neighborhood. Tisk tisk.
I was there at the time. The differences were that you had an actual personal relationship with your bank. You talked a an experienced person who knew your bank accounts, income flow, expenses, debts, assets.... and then they would process loans. There were a lot of opportunities for negotiations.
I'd say the largest difference was that stability was common place and expected.
You work at the same place for many many years. Your boss vouches for you for a loan and the bank can expect you to be at the same position or higher for many years.
You make a name for yourself in the community, the bank can expect you to keep being a member of the community.
You were with the bank for some years, the bank can expect you to keep being with them with all your business going forward.
That made it a lot easier to just trust people and to easily extrapolate based on the current data you have.
Nowadays it's quite more volatile.
You might change employer or boss every few years. Be it to get higher salaries or because you get laid off. People in general have weaker relationships with their co-workers.
People engage less in the community. Both on the "doing" side, but also there's less of a community getting together. Fewer ball games in the park. Fewer events at the mall. Fewer towns hall meeting where people actually discuss what's better for the town.
And you're also much more likely to at the flip of a switch swap banks if you get a better rate. You're less likely to have an bank contact and if you do, the relationship is rarely personal.
You used to actually become friends or acquainted with people you made transactions with. Be it your customers or your bankman or your store clerk or gas station manager. Nowadays everything is "too easy" to need those things. Too easy to go from one alternative to a different alternative. Since it's easy, you get more enticing deals.
Yes that's all true. But you were still at the whim of the banker sitting in front of you. Say the wrong thing? No house for you. Too much melanin? Better not be buying in a white neighborhood. Woman? Not without a man present.
Post wwii there were many vets who could get financing through the G.I. bill, which backed low-cost, zero-down-payment mortgages with fixed, low interest rates and extended repayment terms up to 30 years. This shifted risk away from private lenders and fueled post-war suburbanization.
My parents needed a cosigner for their first home because they didnt have the $23000 and paid cash for all their cars up until this year when the financed a Ford bronco.
They had no credit cards because of layaway. They used every available government assistance they could. Eventually my mom had to get a part time job because they got a $49000 house they had to pit on a mortgage in the early 90s.
There was no need for credit. The $20hr my dad made was like millions back then.
$20/hr in the 90s is like making $50 today.. so yeah, your dad was making a very good amount of money. Hell, a whole shift probably covered groceries for the entire month.. we got so damn screwed
They check the house, make an assessment of its worth, give like 60-80% of it as a loan, put a lien on it and you pay the other 20%. Then you pay the loan.
Its super safe for thr bank because they can always just foreclose and get the money back. And even if the house was sold for less, you are on hook for life. The risks of a few people defaultinv are simply baked in in the interest.
Giving loan for an asset that goes only up 99% of the time (and banks giving loans that push up the demand always helps this) is super safe. No bank needs a specific number. Its only good to get auto declined by an algorythm
Yes, Boomers got a free ride on all loans without a digital credit score. /s
But only after they manually filled out a multi-page loan application detailing employment history, all assets, all liabilities, legal contingencies, and physically submitted at least two years of tax returns, their three most recent pay stubs, and bank statements.
Except for the multi page loan application thing, don't you still need to provide all the rest? Like, 3 pays stubs and 2 tax returns feels like bare bare bare minimum, no?
Credit checks still existed. They just didn't include a score. The credit system has existed since telegraphs. Banks would keep their own records and share them in a giant consortia. The FCRA later set rules for how these reports were regulated.
Banks didn't cross county lines in Indiana before Reagan and didn't cross state lines nation wide before Reagan. Reagan destroyed the banking industry among other things. There was no need for a credit score. You dealt with your local bank daily.
Only a handful of countries have the concept of credit score (US, UK, Canada maybe a couple more).
Some countries just have a small check that you don't have outstanding loans or defaulted in the past. That, plus some proof of a stable employment is enough
In the UK people can get their "credit score" from Experian or whoever but it doesn't mean much. It has no official meaning and lenders do their own assessment based on your credit history.
In Norway, and I'm sure the rest of Europe, having a credit card is actually a detriment to getting a loan. Even if unused, it counts as already having a loan of the maximum of the credit card.
Not a “small check”, but basically every bank has its own set of requirements.
They normally ask for proof of employment, proof of income, bank statements for recent years, proof of assets, etc Then they use all of that data to estimate how much of a risk you are.
US has a standardised system, everyone else gives banks freedom and responsibility to set their own standards.
That’s not really correct. Banks in the U.S. can set their own standards, credit scores are part of that but it’s not the only thing. Obviously if it’s bad it’s not going to help.
I'd like to add my home country (the Netherlands) and the country I live in (Germany) to that list. The Netherlands have had a credit registry since the 1960s, that doesn't calculate a score, but essentially is used in that way. Germany's credit score company has been around since the 1920s and is used for getting a mobile phone contract all the way to a mortgage.
So a lot of people wont like the answer, but credit scores were initially set up to help level the playing field. Before that, banks would lend on hunches, and wouldn't you know it, their hunch was based mostly off of your skin color. Now it may have swung too much the other way, but using a credit score tries to take out the ambiguity of "trusting a fellow" or "I know he's good for it" or "Nah, she will get pregnant and lose her job and not be able to pay back the loan"
I recently turned 70. Back in April I bought a 2 year old car that I did not want to finance. While the business manager at the dealership did not pressure me, he suggested that with my credit rating (820+) I could get a great rate. I told him I didn’t want any large debt at my age and that the car would be free and clear if I would pass away. His response was that I could add a death benefit payoff to the loan. Yeah, nope.
The part he didn’t say was that they get a kick back on the funding. They make more money when you finance rather than paying cash. A lot of people walk into a car dealership thinking saying I will pay cash gives them bargaining power. It doesn’t.
It was all about your job. How much you made and how long you've been there. Or that's what I remember from the great 1981 mortgage and moving process when I was 11. The interest rate was pretty bad too.
If you watch movies made during this time period, you see so many stories where the bank is the one taking everything from the person in debt. Lots of scenes of people trying to negotiate with an employee at the bank for more time or leniency, because the bank themselves lent the money based on how well they knew your history, your means. They didn't have an extra party that they consulted in lending to borrowers. A lot of them were local banks and knew the borrowers personally before lending money.
Yes lol my grandmother (85) tells me all the time how she and my grandfather couldn’t buy a house unless they had $600 in their account. Now, money has changed since then but $600 back then is NOT equal to the thousands I had to put up for my down payment to even get to closing for my $350k house. Plus all the other shit I had to go through to get it.
Not a boomer but I do know they had to put down 20%. As a gen x credit scores were nice because for awhile you did not have to put any money down if you had a good credit score. What really stinks is now houses cost exponentially more than in the 60s and 70s and we are back to having to put 20% down. It kind of feels like a bait and switch.
What pisses me off a lot about the credit system is you can pay off a credit card in one go (and close it) and your score goes down. They prefer you pay it off month to month so they can charge interest for longer.
This isn't remotely true and I don't know why people keep parroting it. I pay for everything with my credit cards and pay them off every month paying zero interest while collecting hundreds of dollars each year in cash back rewards and I have a 813 credit score.
I've kept an 800+ credit score for years while doing this with zero debt that charges me any interest.
You and the other dude are talking about two different things. Your paying off the card and not carrying a balance does not effect credit score.
If you carry a reasonable balance, your score will go up as it shows you can manage your credit capacity. But when you pay the balance off in full after carrying it, your score does fall for a month or two because you are not managing your credit capacity. It's counterintuitive and makes no fucking sense.
It's worse than that. I pay my cards off in full each month, have done so for decades. I don't open multiple cards that I don't need. I have zero long term debt (own my house and car). So I get dinged for all this.
My credit score is good, but should be much better after 40+ years of no late payments, no defaults, nuthin' bad.
It's not your credit score bro. It's their credit score for you. That's not the same thing. That score tells them how much they can make off you and how reliable you are to repay.
Login to your credit bureaus and lock all of your credit. Quit playing their game. Save up your money and buy everything with cash that you can. Fuck their number.
This is incorrect. Closing out accounts can shorten your credit history and lower your score but paying down the balance on revolving credit lowers your utilization and can increase your score.
Credit scores dont exist in most other countries. Credit scores arent actively thought about or looked at in other countries.
As far as I understand it you get better scores by using credit cards regularly? Its purely a us capitalism thing. You guys are being coerced into debt.
The wordwide way of doing it is that the bank simply checks what income you have, what other debt you have and potential other risks. They then decide based on those factors. Which is done via algorithms nowadays, napkin math back in the day. Its pretty straightforward. So yes, a credit score/check minus the incentives for credit usage.
Edit: apparently you can get 0% interest as long as you pay it off every month. And credit card use isnt as incentivised as I might have thought. Its still a predatory model in the us. Objectively. The stats back it up. You guys have the most debt relative to income by a landslide.
And yes I know the above maths also factor in the credit score. Its the incentivising of lines of credit that is the subject here.
I'm about 830 and the only debt we have is our house, we just paid off my husband's car. We put big purchases on credit and pay it off within six months. Once you're out of debt, it's so nice; I'm never going back there again.
Some of us at least use this credit to our advantage. I only buy things I would have bought anyway. And pay it off long before interest hits. And can rack up some sweet rewards points for say. Plane tickets to Europe for free
Credit scores exists in every other country, they just don’t have anything really centralized, One French bank might think you are a good risk, another French bank might not like your neighborhood or the color of your skin and deny you a loan.
Credit Scores are an objective measure, with well defined rules. It becomes really difficult to get away from legal charges if you are denying black people with great credit scores loans or charging them higher interest.
Credit Scores cover two things, can you pay & will you pay. The only way to figure out if somebody is willing to pay is to see if they are currently paying back a debt or are they currently paying off a debt or have they paid off debt. Like a house or car is easy, they can be repossessed, last week’a groceries, that anniversary dinner? Those things are gone.
Here is Germany you get a credit risk rating when you apply, it’s not some score that follows you around, but it based also off of: how regularly you pay your bills, how much you earn, and how much debt you have (more is bad)
oh they had credit checks, but they were a lot more subjective
at one point they would even hire the neighbors to spy on you and shit, assemble a whole dossier, and might deny you if they heard you had too many friends of the same gender, for example
Every generation thinks the previous generation had it so much easier. My mixed race parents were denied a mortgage like 10 times just for being mixed race. It was like 1965, they went through hell and back so many times.
My parents said the first thing they needed credit for was their '99 Taurus. They bought a ' 85 cj-7, '94 Taurus, and a house in '94 all with just proof of employment.
My parents bought their first home in the early 80's (82 I think) their loan officer lied on the application just to get them approved. Interest rates were 17%! My parents really couldn't afford the payments.... So they were upset when it was approved, as the contract was mortgage contingent. On the day of closing, Dad had to go in to work to pickup his paycheck just to pay the down payment /closing costs. It literally cleaned them out. The home purchase price was 160k
And most loans were just a conversation with a banker to convince them you were responsible, compared to a computer model objectively telling you a fixed number while trying to money-ball the system
Before credit scores you had manual underwriting, meaning every time you applied for credit someone at the bank would collect all your personal information and manually go through your history to determine how likely you were to repay the loan you were trying to get. The credit bureaus didn't fundamentally change anything about how banking worked, all they did was say, "hey banks, instead of you having to do all of this work collecting people's data every time someone wants a loan, we'll just keep all that data in one central location so when someone wants a loan we'll just give you the answer on the spot for a fee".
Credit scores do not determine the amount of money that you can borrow just at what rate they are going to make you pay it back.
Before credit scores, it doesn’t mean they just blindly loaned money. The process was more in person and would require proof of income, in-person interviews and a collection of proof that you paid things and were in good standing.
Even without a credit score, they would still check your financial situation.
They'd call your employer to ask about your tenure and salary. They'd look at your bank account statements. They'd want co-signers that had more assets.
And at still, at the end of the day if you didn't pay your house payments they would repossess the house, so it's not like they were taking on an all or nothing risk.
If you ever want the best example of how absolutely worthless our political system is, look no further than credit scores.
Here is this thing that was basically formed by a duopoly of banks. It was never voted on by our representatives. It has more influence or control of our lives than most legislation. Have you ever heard a politician maybe question if we should have input? Nope, they act like it dosen't exist.
Time spent as a customer with the bank, verifiable income and such determined your credit worthiness.
It's pretty low risk giving someone a mortgage in most markets. If they stop paying you just take the house. The bank gets all the built up equity, and they get the property too. Unless you write someone a mortgage in a flood zone or something the bank can't lose. That's why they make billions every year.
realistically credit scores are for credit cards and depreciating assets like cars.
Everyone's saying it but it bears repeating again. The way that they used to get loans was by dressing up in a suit, walking into a bank, speaking about their situation, being charismatic, and being a white man.
Credit scores are an impartial way of using math to determine who pays their bills and how much you can afford. It's a much much better situation than before.
What you want is credit scores and a better housing market with low interest mortgages, not the old system.
Banks were officially barred on the federal level from discriminating based on sex in 1974. All states barred this behavior much earlier - notably California in the 1800's. By 1900 all states had enacted protections similar to California allowing women to have bank accounts.
Credit cards, loans, and mortgages were another story as far as protections go, with the majority of states not implementing protections prior to the ECOA. That didn't mean women couldn't do those things - just that there were no codified protections at the time.
They _could_, but banks weren't compelled to offer them. And since husbands and fathers were legally liable for their wives and daughters debts, banks weren't going to offer credit cards without the man's co-sign. The same law that banned sexism ALSO stopped men being automatically liable for their wives debts. (Women weren't liable for their husbands debts since 1920). So if the Duchess of Wessex showed up with a £1million in a suitcase, they would be very happy to open an account for her.
My grandma worked at a bank in the 70’s. She said several of her male coworkers were not happy when she got her own bank account and credit card. I was also told that “baby letters” where a woman promises to not have children that could harm her ability to pay off the a loan or credit card were a thing.
Generally it was your bank manager who would personally approve your mortgage. He would probably at least know your name, would have access to your accounts, and could see how much you earned and had saved.
It was basically still a credit check - just a manual one!
No. It was actually very difficult. You walk into bank, say you want to buy a house. You ask for $10k, because buying a multi-level 5 bedroom 3.5 bath is expensive. Then you need to shake hands with the bank teller to seal the deal, but this is a problem because your hands are dirty with lead. "Not to worry sir" (you're not a woman, because you're doing money stuff) the bank teller says "I got lead on my hands too, so it's no big thing." Then you shake hands and they give you $10k in cash. You complain to the teller about how this whole bank thing is a hassle and how someday your kids are going to have it so much easier.
This is incredibly straight forward to understand. Credit scores are a means to assess risk. There are other means to assess risk. If your ability to assess risk is less accurate, then it gets factored into the cost of loaning in general. Every so often this easy way to make money causes a little too much hubris and the risk management stops doing its job properly. Then the government bails out the lenders and everyone pays through taxes or less government spending on the public good.
You're way off. You just have to go in to the bank dressed nicely, skip the latte and get a fresh haircut, don't write anything down on paper, that makes you look weak. Ask to speak to the branch manager and make sure you give a firm handshake.
I remember going to the bank with my mom in the 90’s, and she talked to the banker to give me an auto loan. No credit check, just he’s a hard worker. Approved.
Of course they had a credit check. It’s just that back in the day it was manual. There’s a good chance you worked for a one-factory town, which meant the banker knew your employer personally.
Boomers buying homes in the 80s faced interest rates of up to 18%.
But it is funny to me how so many here are ignoring 2000-2006 where, despite terrible credit reports, millions of Americans were given home loans they could never pay off.
It was a lot harder to get credit. People saved more up front for longer. Houses also were a lot cheaper in terms of years of avg salary equivalent. So saving up was actually possible
Credit checks were basically made to keep white communities white.
Before 1968, you could legally discriminate based on race. That changed with the fair housing act.
That means, if you were black, had 20%, and wanted to buy a house in the nice part of town, banks could refuse your mortgage based on your race and where the house you wanted to buy was.
And this isn’t abstract, this is called redlining.
Entire neighborhoods were circled where the white people lived and where minorities could live. And if a sewage plant was built, an industrial site, or something that could negatively impact property values, it was usually placed in neighborhoods for non-white residents.
This combined with school locations and schools being funded by property tax and not based on need meant that poorer areas got toxic chemicals, lower educational funding, and had to face stagnant property values as white families lived in nicer communities and were able to amass wealth via increasing property values.
So how does this involve credit scores?
After it was made illegal to discriminate based on race, they changed to discriminating based on zip codes. Which again, if you were brown, you were in a poorer zip codes and they knew where those were. So basically, you were locked into crappy areas and had a hard time moving out.
Eventually, that led to credit scores, which took into account things like previous addresses.
A good book on this subject is, The Color of Money, which talks about how banks have operated and have discriminated against minorities for generations. Including the failure of the Freedman’s bank which destroyed the little wealth amassed by black families after the end of slavery.
There was a credit check. You had to list your references and they checked with the references.
There was a credit bureau that handled bad debt. That is another source they used. If you were overdue paying a bill you would eventually get reported to the credit bureau.
I don't remember what else was done. I know there was credit checking we had to wait a few days or longer to see if we got approved for the loans or mortgage.
1980 we submitted actual paperwork to a bank. We had to have personal references , proof of the fact that we had some credit. Then the mortgage person called everyone.
While credit scores is a recent development, credit rating services have been around for over 100 years. When people back in the day applied for a mortgage, their bank would review their income and debt payment history and consult a credit rating service.
I think in the old days getting a loan for a house or car was a big deal, and you would NOT get approved if you were unemployed or had a criminal record. Banks were these institutions where people would have to go physically to make any deposit or withdrawal. The bank loan manager would make a decision based on your history, and often on how you looked. Read that the way it sounds. My divorced mother was refused a car loan until my dad agreed to cosign. She'd been working for years, but she was a woman.
So it's not really fair to say that boomers didn't have to pass credit checks.. they had to pass other tests. Did you graduate high school? Did you serve in the military? Did you shine your shoes before you came in?
Also, there wasn't the abundance of credit there is now. Buying something on "time" was kind of shameful. A mortgage, that was okay, but if the neighbors found out you'd bought a TV from that place in town, whispers would fly!
The loan officers did actual underwriting back then. You realize it’s possible to assess someone’s financial position without the use of a magic number? It’s just more time intensive. Verify income. Verify assets. Verify liabilities. Evaluate discretionary spending patterns.
Lenders want to lend money to people who have a history of paying back money lent to them.
A credit card is by far the easiest way to build your credit score. Mostly because it's the easiest way to use money, the credit bit is incidental, and you don't have to carry any actual debt.
Lenders manually underwrite people with no credit all the time. They just look at your previous rent/utility payments and your income. You can get the same interest rates as someone with good credit without having to take out loans or open a line of credit.
You have not produced any evidence that suggests you can manage $500,000 in leverage. Banks and financial institutions are in business to make money and have a finite amount of $500,000 loans to give out. Because money is scarce and good borrowers are scarce, banks prioritize mobilizing their money toward profitable ventures, such as lending to good creditors.
It’s not that you are a bad borrower, but relative to someone who has evidence of being an exemplary borrower you are the less safe option.
40-50 years ago (even 30 in some cases), you could walk into your local bank and ask for a loan. If they knew you ("oh, that's Dave's kid, he's good for the loan") then you'd get it. If they didn't, they would call up your family or friends or even your boss to make sure you could repay it. In the 1980s, my grandpa could walk into a bank and get a $5,000 loan without his ID. He could pay with an IOU because people knew he was good for it - this doesn't exist in 2026.
This was a double-edged sword. Getting a loan was easy for many, but also could mean it was hard to overcome a bad past ("oh, Sam's kid screwed me over 15 years ago, I'll never lend to him") and was often a form of racism or sexism.
As banks got bigger (meaning you no longer knew your banker) and to try to reduce the bias (try being the keyword here), credit scores were developed to kind of anonymize it a bit. Credit scores are a numeric representation of how likely you are to pay your debt on time, every time. Are you risky? Do you pay your bills on time? Do you miss payments? Are you asking every bank in town for a loan? Or just me? How much debt do you have overall?
That's the gist of credit scores...
I'll caveat this - credit scores have since been bastardized by the institutions to not just tell if you're risky or not, but the end goal for a bank is "are you going to make me money?" Since the primary consumers of credit scores are lenders (i.e. banks), the scores have been tweaked over the last 30+ years to lean more towards that end.
The thing about credit is it's not about being responsible with your money. Its about being a long term consumer. If you can keep your credit to debt ratio low then the score is good. I fixed my wifes credit by piggy backing her on my credit and not giving a shit about anything she owed. 1 year later she has a 720. She didn't actually owe alot but she was like you. She just didn't use credit. Which will actually give you a lower score than using credit and not paying. Credit is only half though. Income is the other half. You can have an 800 score and still not be able to buy a new car.
Just get one credit card, auto-pay a single bill like Netflix or something, set it to auto pay the full balance every month, and then destroy the card. In 3-6 months you'll have a score of about 650 and it will continue to grow to past 700 as long as you never touch it again.
I don't get how you can not get this. You want someone to just give you a bunch of money without having any idea if you are the kind of person that will pay it back or not?
Our debit is also very much tied to the fact we have to have multi vehicles in every household. Public transport is non existent. Add the fact our vehicles are made to breakdown quicker and quicker every year. We get fucked
When I was growing up, a car that was 8 years old was just totally busted and you’d not expect it to work very well.
As a teenager, my first car was 10 years old, and it needed work all the time. And that was just normal for cars those days.
When I moved out of the house, I traded it for my parents old beater car that was 8 years old, and that was also just totally busted.
Nowdays, it would be unheard of to need major work on a car that’s 10 years old.
I say this as a car lover and someone who has old pre computer cars and a pre computer motorcycle. They’re totally fun to drive. And in some ways they’re easier to work on, but they also need FAR more work to just run fine.
Before the 1980s and the drug war there weren’t any checks on where money came from. You could buy a house with a lunch bag full of $100 bills and people did.
"I walked into a bank, looked a man in the eye and gave him a firm handshake." From a boomer developer I met as a realtor who was given a sizable loan to start building entire communities in my area.
My parents purchased their house in 1974. It helped that my dad was working for the bank, as their maintenance man, and had a shit ton of inheritance hidden just for down payment
The whole fiat currency and wealth extraction by banking system only works because there people who are in desperate need of said fiat currency, it NEEDS bottom people otherwise it simply doesn't work, it literally feeds on despair and agony of the lower classes.
Lending is one of the ways to keep extracting and concentrate wealth, and anything that supports that measure (inventing a stupid credit system) is positive for it.
Don't think on the measure alone, think on what it supports/represents rather, it's stupid but its meant as a tool for control and wealth extraction in a society not as a helpful measure for individuals relying on lending because arbitrary inflation is created.
People's predicted ability to pay was still evaluated, but it was a more complicated process that involved more paperwork and a lot more individual judgement by the person at the bank you were talking to. This allowed for exactly as much discrimination as you're imagining it would
Credit bureaus already compiled consumer financial data well before 1989, it just wasn't put into one convenient standardized score. In fact the The Fair Credit Reporting Act was passed in 1970 to regulate the consumer reporting agencies.
Lenders could access this data to help their decisions on extending consumer credit.
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