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Credit Education > Debt Management Help > The Crediting Pickiness of the 1970s

The Crediting Pickiness of the 1970s

By Janet Lacey
Published: Sunday, February 7th, 2010

The recent global recession is not an isolated economic downturn that America has felt over the last few decades. Analysts do not have to look back that far to the Great Depression of the 1930s to find out what went wrong and what truly caused the benchmark financial downturn. In the 1970s many companies have shut down crediting individuals that wish to get mortgage loan, auto loans, and credit card accounts. The whole 1970s crunch was marked with the 1975 conservative style of banking. Banks became more conscious with their managing debts schemes rather than giving out credits and loans to everyone who claims that they can pay for it.

After the recent recession all entities active in the financial market where brought back to the 1975 conservative dilemma. Crediting and financing companies start to question the real capabilities of credit applicants to pay for the loan that they wish to get. The paranoia and pickiness of the crediting and financing companies are manifested in the recent adjustments of the credit score computation formula to the biases of late card payments.

The economic landscape during the 1970s is a lot more different today. Their differences put into the line the question whether financial entities should start rethinking their attitudes toward giving out credits and other financial agreements.

In the 1970s only 40% of the whole American households have at least one existing card account. Today there more than 75% of the American households are using cards as their means of purchasing. Three decades ago the revolving balance value only amounts to $55 billion, but know with just American revolving balance alone it can amount to $1 trillion. Managing debt also seems to be a priority of households a few decades ago since 63% of the American households are fully paying their card bills, as compared to the 45% today.

During the conservative times, card companies are more pressing on the manner of payments that they require to their account holders; to do this most card companies are charging at least 5% of the total debt of the borrower in his or her monthly bill.

There are just too many crediting companies that offer their services to a very limited market base, because of this almost all card companies where forced to lower their required payment to just 2% monthly. The credit reports of most household back then would probably have lesser inputs in the remaining balance information. Back then, crediting companies would like to keep their credit accounts paid on a regular basis as compared to today’s crediting attitude that allows settlements and extensions.

The card business is not the only conservative sector during 1975, auto loans and mortgages also become more conservative in the way that it is being handed out. Crediting and financing companies would not want to get risky investments from individuals who have shaky finances simply because they are managing debts themselves. It may sound far behind, but it is not impossible that the conservativeness of 1975 will come back to make the financial market less exposed to possible overexposure to bad debts as what happened in the recent global recession.

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