How were credit checks run in the days before internet/computers?

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Nowadays it’s pretty simple for a car dealership to run a credit check or to apply for a credit card, but how was this done and where was this info stored in the pre-information age?

In: Technology

They called a phone number and told them your info and they got credit info back.

Before that it was a mail based process.

Before that it was all based on whether the local bank would lend to you. Because they knew you and knew your income.

Before computerization most banks were small and local. The Bank Manager and/or if the bank was larger the Loan Officer attended Church, joined the Rotary Club (or the Elks, or the Moose Club) and usually knew people or could find out about people’s “reputation in the community”. It was considered to be a simple fact that people who attended church regularly were better credit risks. He could call the local police and see if you had any record, and call the gas company and your landlord to see if you were paying on time. He’d also call your employer and see how good your “Chances of continued employment looked.” For a big loan he might like to meet your spouse as that was also considered a good indicator of your stability and judgement.

Then, the Bank Manager would make the decision based on this gestalt impression of your likelihood to repay the loan. If you were young but had impressed everyone in high school he just might take a chance on you despite having no credit history. It was purely a judgement call based on experience with little statistical basis.

As computers became available, it was possible to gather large amounts of data and start to discover statistical correlations. Additionally as small town America grew up, it became harder to know or find out about people well enough to make a good decision. So, statistical models were built and Loan Officers’ decision authority faded away. This modeling system allowed banks to operate loan businesses in areas where they did not have local knowledge and ultimately killed almost all small local banks.