History of the Credit Report

So who came up with this bright idea of tracking our credit history? It all started with store clerks who kept a record of customers who bought stuff on credit. They listed the amounts on a piece of paper which was then placed in a cuff or a tube worn on the wrist. In an effort to make things more efficient and provide protection to business owners, these cuffs were collected and became references for other stores in granting credit to costumers.

Aside from credit records, this early version of the credit report also contained costumers' character references, driving records, insurance details, and employment information. The database was only open to merchants and creditors whose groups became known as mutual protection societies and roundtables.

One problem with this system was that the credit report only included mostly negative information which were difficult to confirm. Costumers also had no recourse for correcting erroneous data and no means of tracing back an information to its source. Another limitation of this system of credit reports was that it only covered certain areas.

It was in the early 1800s that independent credit bureaus were formed. They had a bigger scope since they were able to set up offices across the country and worked in a franchise system. They also made the credit report more accessible and accurate. Today, there are three giant credit bureaus in the United States: Experian, Equifax, and TransUnion.