History of Credit Reporting

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Since the earliest times, lenders realized that if an individual had defaulted with one lender, they were likely to default with another. The converse was also true: those who paid their debts back on time were likely to pay their debts back to future lenders. Therefore, lenders saw the value in sharing information with each other about their customers.

  

Credit bureaus started forming in the 1800s. Merchants who had started offering goods on credit needed a way to keep track of those likely to pay them back, and those likely to skip out on the bill. Small, local bureaus began keeping track of people’s “credit records,” and sold these records to businesses for a fee. One of the first credit bureaus began in Brooklyn, in 1860.

 

Two brothers, Cator and Guy Woolford founded the Retail Credit Co. in Atlanta in 1899. They created a “Merchants Guide” containing credit records of Atlanta residents that they sold to local grocers for $25 a year. The Retail Credit Co. eventually grew to become Equifax as we know it today.

 

J.E.R. Chilton also started a credit agency in Dallas in the 1890s. Chilton later grew to one of the top five reporting agencies in the US and was sold for $360 million in 1988 to competing credit bureau TRW.

 

1906 saw the creation of the first national organization of credit bureaus called the National Association of Retail Credit Agencies. It consisted of a network of six small bureaus. Today that national organization is known as the Consumer Data Industry Association, and includes 300 credit reporting agencies, mortgage reporting companies, collection services companies, check services companies, tenant screening companies and employment reporting companies. 

 

The number of credit bureaus increased significantly in the 1920s when businesses started issuing the first credit cards to customers. The 1950s saw another large credit bureau boom with the introduction of the Diners Club Card (1950) and the American Express and Bank of America cards (1958) But the credit reporting process during this time was still very much local. Neighborhood bureaus would report to local lenders about customers living nearby.

 

In the 1970s, the number of credit bureaus had reached 2,250. But the development of databases and automated computer processes meant credit bureaus could start reporting nationally. Hundreds of local bureaus were no longer needed. Many sold their records to the major national reporting agencies. Thus, the larger national bureaus absorbed the smaller local ones.

 

There were five major players in the 1980s: TransUnion, TRW, Equifax, Chilton Corporation, and Pinger Systems. Chilton merged with TRW, Pinger was sold to Equifax, and TRW sold its credit reporting division to Experian. Currently there are three primary bureaus (Experian, Equifax, and TransUnion) and only 220 independent resellers.