A brief credit reporting history

Dear Experian,

Who gave permission to collect information at consumer reporting companies, and when did it start?



Dear SPL,

Credit reporting began more than 100 years ago. There is some dispute about who started it, and where, but the approach was basically the same.

In the late 1800s and early 1900s several individuals in different cities began going from merchant to merchant taking notes about the people with whom they had credit arrangements. Those notes could say anything from, “He’s a reliable customer and always repays the debt,” to “He won’t pay, but his father will cover what he owes.”

When a customer would ask for credit from a merchant, the merchant would call the local credit reporter who would share the information they had on file about the person.

We’ve come a long way since then.

Over time, credit reporting became purely objective and came to include only account payment history. It also grew from a local business to regional operations.

In the late 1960s and 1970s, credit reporting became computerized, which made it possible to become truly national in scope.

In 1970 the Fair Credit Reporting Act (FCRA) became the first law to govern consumer reporting, including credit reports. The FCRA has been amended several times but remains the primary national law governing credit reporting.

It specifies who can get a copy of your credit report, under what circumstances, and what the report can include. It also defines the responsibilities of credit reporting companies, like Experian, and the responsibilities of business that choose to report information to credit reporting companies.

Most states also have laws that regulate credit reporting.

The laws recognize that lenders need credit references to protect their businesses from losses and provide better services to their customers. By sharing credit payment information lenders are able to make better decisions and make credit available to more people and at lower cost. And like no other reference service, consumers have full access to the information that is shared. The American credit reporting system is the envy of consumers and businesses around the world.

Thanks for asking.

- The “Ask Experian” team

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