You must be wondering where the credit bureau comes from, who had shaped this idea and so on. Everything in this world can be traced back to some root, and same goes for the credit bureau that goes back to few alternative systems which evolved into the model that is being operated today.
In this chapter we are going to take you back in history to know the important chronicles related to credit bureau.
In earlier times when businesses or sole merchants had a new client, they had to rely on personal information and relations for extending of credit. There was no credit history, especially if the person was a migrant, and so the entire process was a bit dicey, not to mention inaccurate.
A solution for this first arrived in the 1860s, when local merchants decided to maintain list of individuals that had bad credit risk or a risky profile, and further share the list with other merchants. This was the birth of the first non–official credit bureau. By sharing information of risky profiles, they had identified their own risk and were able to offer credit more efficiently to more people.
But when population began to grow and more people started moving or shifting to one place to another place, merchants or businesses now had to maintain information about a wider range of individuals, especially those from outside their local region. This is how slowly, regional and national level credit bureau started to work.
In 1899, the first credit bureau was founded by two brothers –Cator and Guy Woolford. It was named “Retail Credit Company” and is now known as an Equifax Inc. They started the credit bureau business as grocers and supervised the compilation of list of customers, with indications of their creditworthiness for the Local Retail Grocer’s Association. CIBIL (Credit Information Bureau (India) Limited) was finally founded in the year 2000 in India, almost 101 years after Woolford brothers pioneered the movement.
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