When Did Credit Scores Start?

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Credit scores are usually the first thing that comes to mind when you think of your credit, credit reports, or applying for any form of credit. We typically don’t start thinking about our credit until it’s time to apply for something, but when did credit scores begin?

There is a whole history behind these three numbers that make such a significant impact on buying power. 

When were credit scores invented?

Modern credit scores first started in 1989. Known now as FICO, Fair, Isaac, and Company first introduced the credit score model while working with national credit bureaus. It was created by mathematician Earl Isaac and engineer Bil Fair. FICO developed a credit score model that the average consumer could use for lending. But, believe it or not, 1989 was not the first time credit scores were used.

Interestingly enough, you can go as far back as 1841! The first credit reporting agency, Mercantile Agency, was founded. Mercantile Agency used to gather information about the creditworthiness of businessmen. Robert Graham Dun and John M. Bradstreet established two of the most well-known agencies in the mid-1800s: R.G Dunn and Company and the Bradstreet Company. They were responsible for developing alphanumeric scores to help determine the risk factors of businesses.

Over the years, the credit scores and reporting model have changed a bit, but ultimately, they have been around for a long time.   

Who invented credit scores?

1841 – Lewis Tappan founded the first United States agency for rating commercial credit, Mercantile Agency. 

In the mid-1800s – R.G. Dun and Co and The Bradstreet Company were two of the most important credit reporting agencies used for reported commercial credit. 

1899 – The Retail Credit Company was founded. The RCC eventually changed its name to Equifax, which is still one of the three credit bureaus known today. 

1956 – Bill Fair and Earl Isaac founded Fair, Isaac, and Company, also known as FICO

1969 – TransUnion, created in the previous year by Union Tank Car Company, acquired the Credit Bureau of Cook County (CBCC). They eventually became the first company in the credit reporting industry to replace accounts receivable data with the automated tape-to-disc transfer. 

1989 – FICO and Equifax launched BEACON, the first modern credit score. 

1996– Experian was launched after Brian Capital and Thomas H. Lee acquired TRW, Inc. 

2002– TransUnion entered the direct-to-consumer market after acquiring TrueCredit.com.

History of credit scores

Credit scores were not always used for consumers. Initially, creditors used them to evaluate the creditworthiness of potential business customers. Lewis Tappan founded Mercantile Agency, the first commercial credit reporting agency. His company used correspondents to collect information about lenders and borrowers across the country.

This method would be frowned upon today as it was all subjective leaving room for discrimination. By the 1960s, there were over 2,000 credit bureaus in the United States, and by this time, scores were computerized.

At this point, credit scores were still used commercially and not yet for individuals. Eventually, in 1989, FICO worked with other national credit bureaus to create the first generalizable credit score that could be used for consumers. We now have the modern-day three-digit credit score that we know so well. 

Modern-day credit scores

Modern-day credit scores are based on complex calculations. This calculation mostly depends on a consumer’s utilization, credit mix, age of their accounts, payment history, and the number of outstanding hard inquiries one has at that time.

These numbers determine a consumer’s creditworthiness and ultimately affect your ability to gain more credit. They can even impact your insurance rates. Lenders assume that the higher your credit score is, the less risky it will be to provide you with a loan. FICO is one of lenders’ most widely used consumer credit scores, and it is easy to access your score. Every consumer is entitled to one free credit report annually.

Annualcreditreport.com allows you to access your full credit report every 12 months; however, it does not include your credit score. Several websites, mobile apps, and even some credit card companies provide you with your credit score from one, if not all three, of the credit bureaus. You can also receive your credit score when applying for credit, typically in the mail from the credit bureaus.  

Here to stay 

Credit bureaus and your credit score have been around for a long time and are likely here to stay. The history of credit scores has evolved quite a bit since the 1800s, but one thing that stayed the same is that they measure your creditworthiness. Therefore, it is crucial to keep on top of your score and do your best to take care of it.  


What year did credit scores start?

FICO introduced the credit score in 1989, although credit scoring systems have been used since the late 1800’s

What was used before credit scores?

Before credit scores, creditworthiness was determined using credit reports from different credit bureaus. 

Why were credit scores invented?

Credit scores were invented to allow credit institutions to determine a borrower’s creditworthiness. 

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