Earlier Credit Reporting System

Earlier credit reporting was not a part of any financial system. In the 5000 year history of debt, credit reporting has been a deeply personal practice but eventually around 1700s, credit reporting came into picture. The first recorded group that shared credit information about consumers was the colorfully named “Society of Guardians for the Protection of Trade Against Swindlers and Sharpers,” which was founded in London in 1776. The Society produced reports for its members on the credit history of individual customers, which were often full of gossip in addition to credit information. Like the society, the early credit reporting agencies were small, local organizations that were essentially groups of merchants sharing information about consumers. This allowed them to offer credit to more people and avoid lending to high–risk individuals. Consumer credit reporting agencies emerged in the United States in the late–1800s in response to the onset of the industrial revolution and the vast population shifts that followed the end of the Civil War. The report at that time was based on subjective matters. The use of credit reports has also changed over time with advances in technology and enhanced analytics. Earlier manual process of credit report was time consuming, error–prone and subjective. This began to change with the emergence of the statistical tool credit score which was introduced in the 1950s.

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