Just like the incremental growth of credit cards, which credit reporting agencies began locally and expanded over time. The process of keeping tabs on consumer spending habits started small and grew into the organized, efficient and massive system of credit reporting familiar to people today.

Credit reports started inefficiently

According to Maxine Sweet, vice president of public education at Experian, originally five big credit reporting agencies existed, along with many mom and pop credit bureaus sprinkled liberally throughout the country. Over time, the field narrowed to the three big credit reporting agencies now dominating the field: Experian, Equifax and TransUnion.

Data collection and storage differed greatly from the system used today. Credit reporting began manually, with someone going from merchant to merchant collecting reports on how customers paid their bills.

"Credit reporting today isn't perfect by any means, but you don't want to go backwards, trust me," says Sweet.

"It used to be that a credit reporting agent would call a merchant and say, 'Well what do you think of that Raymond Hindley?' And the merchant would say, 'Well, you know he pays pretty good -- but he beats his wife.' Or, 'he drinks' -- you could get a lot of personal information mixed in there," she says.

Also very different from today: Viewing your credit reports and disputing information entailed a lot of work for consumers.

"Back then when consumers did want to see their files, they would try to make an appointment to come into a local office and wait in line. It could be very long, you couldn't control if 20 people showed up at one time or if one person showed up," says Sweet.

"The other thing that is different -- when everything was first computerized, the computers could not handle the volume of data for the full nation of people. So if you moved from one region to another, your credit report did not move with you. If you moved from Texas to California, you would have to start over building credit," she says.

By 1970, when the Fair Credit Reporting Act was passed, the process had been streamlined and more consumer-friendly regulations were in place. It formalized what information the credit bureaus can report and for how long, as well as how to correct errors. It also required the bureaus to provide reports at the request of consumers.

Consumers got another boost in 2003 with the passage of the Fair and Accurate Credit Transactions Act, which provided that every consumer could get a free copy of their credit report annually from each of the three bureaus.