Where Did The Three Major Credit Bureaus Come From?

A credit reporting bureau is a company that keeps track of people’s credit history. There are three major credit bureaus that are used when anyone is evaluating credit. Our bureaus were established because people were taking advantage of credit providers. They would default and move away to take advantage of someone else. A system of keeping track of people’s ability to pay and their reliability of paying was thus established nationwide.

The advent of credit cards became popular in the late 1970’s and lender loss was becoming common. High risk borrowers were ruining credit for lower risk borrowers because they never paid back the funds that allowed creditors to lend another day. As a consequence, the SQL database system, invented by IBM, made it easy for credit agencies to digitally keep credit files and information on hand. Our modern credit system still uses the same system today.

Who They Are

The three credit reporting Bureaus are: Experian, TransUnion, and Equifax. Experian is the youngest of the three and specializes in providing businesses with credit-worthy leads for direct mailing. If you get a pre-approved credit card then it was probably Experian who decided that you qualified. TransUnion started in 1968 and is known for keeping track of foreign creditors and the credit of Americans abroad. Equifax is the oldest having started in the early 20th century. It got its start keeping track of corporate credit which came under scrutiny during the depression. Its main office is in Atlanta but it has offices around the world.

Each of these companies has different criteria for scoring your credit so looking at all three is important. By law each of them are required to provide one free credit report to each U.S. person every year. Also, these companies provide information instantly now via the internet especially for quick online credit decisions. Keep in mind that the 30 second decisions are based solely on score whatever that may be.  

The Modern Agencies

Although these agencies have been around for awhile, the advent of the internet in 1980’s made credit reporting easy. With the use of the internet, requesting of credit reports became common place and faster. Before the internet, a lender had to request your report in writing, by mail. The information was often questionable because it relied only on that information that was reported or that the credit bureau could obtain.

By the 1990’s legislation required that lenders report (Fair Credit Reporting Act) all credit activities (on-time payments, default, write-offs, account openings and closures and the all-important available credit etc.) for private persons and corporations.

It is important that everyone receive and closely review their free credit report copy every year. Our modern society is plagued with identity theft and severe credit hurdles can arise if the information is not erased in a timely manner.



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