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The History of Credit and Credit Scores

The History.or Credit & Credit Scores 1860 Cooperative credit bureaus began to pop up in the U.S. and around the world in the 1860's. They began simply by creating lists of local customers that assessed their credit worthiness. These lists were sold to small businesses so that merchants could determine whether or not to lend to certain customers. Prior to credit bureaus, merchant lending was based on the merchant's personal opinion and relationship with the consumer. 1866 CINITED STATES OSTAGE UTIX UTLX, which would later create TransUnion, launched. CENTS 3 1898 Retail Credit Company PO Box 988 UTLX is known as the "tank car Founded by two brothers, Cator and Guy Woolford, Equifax launched as Retail Credit Company. company." Tank cars are large railroad cars that can carry liquid such as oil. SALT LAKE CITY 10 UTAH 1900 Equifax got its start The first versions of credit cards were issued as "proprietary cards" by oil companies and department stores. in Atlanta where Cator Wolford charged stores $25/year for access to his "Merchant's Guide." 1901 The Company had TRW, which would go on to become Experian, was founded as the Cleveland Cap Screw Co. 5 Employees. 1920 They Sold to 37 & 47 Equifax, which experienced great post-World War I growth, had offices throughout the U.S. and Canada by 1920. Cleveland Cap Screw Co. merchants grocers branched out from cap screws posting a first year loss of to automotive valves and parts. $2,242. 1926 Thompson The Cleveland Cap Screw Co. went through many names and owners before becoming Thompson Products Inc. in 1926. Now Equifax has over 7000 AUTOMOTIVE PRODUCTS Employees in 14 Countries EXPIRES DECEMBER 31, 1955 SUBJECT TO TERNE ON REVERGE SIDE 1949 flne Dinors CREDIT The Diner's Club Card was introduced to the public and quickly gained 20,000 card holders by 1951. IDENTIFICATION Club IR. ALFRED BLOOMINODALE posting annual revenue worth 910 N. LA CIENEGA BLVD. LOS ANGELES 46, CAL. $1.5 billion. 2000 YOURACCOUNTNO 1956 As more and more consumers obtained credit cards, lenders needed a way to mitigate their risk. This led the Fair Isaac Corporation to develop the FICO credit score model for private use. The FICO score is a three-digit number between 300 and 850. 300 < FICO > 850 A high score encourages lenders to give you a loan. 300 - 649 650-699 700-749 If your score is between 700 750-850 Any score that is below 650 is subprime. You will likely be declined a loan. higher interest If you score between 650 and 699, you're and 749, your likely to have If you score higher than 750, loan approval almost always goes through. approval may come with a rates and could higher interest be declined. rate attached. FICO scoring models are used by all 3 major credit reporting agencies in the U.S. TransUnion, Equifax & Experian 1958 American Express CREDIT CARD American Express entered the credit card industry. In 1959, they created the first plastic charge card (prior to this, all cards were cardboard). EQUIFAX 012 345 b78 9 1959 JOHN Q PUBLIC VALIO INC 12mOHH 1960 TODAY Soon to become Equifax, the Retail Credit Company was the largest credit bureau in the U.S. by 1960. There are over 576.4 million credit cards in the US and over 507 million debit cards. Visa credit: 270.1 m Visa debit: 382 m MasterCard credit: 203 m MasterCard debit: 125 m Know Your American Express credit: 48.9 m Discover credit: 54.4 m VantageScore 1968-69 1970 1968 – UTLX launched TransUnion. 1969 - UTLX purchased the Credit Bureau of Cook County to get started. TRW began a small-business database to bring their credit bureau clout. In 2006, the 3 major credit bureaus unveiled the VantageScore to compete with the FICO score. Experian Unlike FICO's traditional 300 to 850 scale, the VantageScore goes from 501 to 990. TransUnion. 1980's Since TRW's main business model A: 901-990 was in creating automotive electronics, they feared their credit bureau was overshadowed, so they named that division of their business Experian. B: 801-900 FAIR CREDIT REPORTING ACT C: 701-800 1997 – The Fair Credit Reporting Act was amended to allow consumers the opportunity to correct erroneous errors on their credit reports and required that any negative nformation leave reports D: 601-700 1985 – Experian was the largest credit bureau in the United States F: 501-600 with over 90 million consumers on file. 7-10 A VantageScore should be more consistent across all three credit bureaus since the same formula is used to calculate scores across the board. years. 1986 – Experian created the first consumer credit report, giving consumers insight into their credit. 2003 – FCRA was amended allowing all consumers to view their credit reports from all 3 bureaus for FREE once a year. 1989 – FICO worked with Experian to create the first credit score system for credit bureaus. VantageScore VS FICO The VantageScore is based on 6 variables: The FICO score is based on 5 variables: Payment History 32% Utilization 23% Payment History 35% Balances 15% Age of History 15% Depth of Credit 13% Amount Owed 30% Recent Credit 10% Type of Credit 10% Available Credit 7% New Credit 10% Sources: 3 credit scores, 1 place.

The History of Credit and Credit Scores

shared by youcom on Dec 28
Credit Cards are a dominating part of today's life and purchasing. This infographic provides a brief history of credit card laws, the advent of credit scores, and the effects that credit score has on ...



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