The Fair Credit Reporting Act refers to the credit bureaus as Consumer Reporting Agencies or CRAs. The “Big 3” credit bureaus are Trans Union, Equifax, and Experian. There is a fourth reporting CRA known as Innovis, which creditors rarely use.
These are private for profit companies who make money by collecting and selling consumer information. Let’s look at the history of each of these four Consumer Reporting Agencies.
Trans Union
Trans Union got its start back in 1968 as a holding company created by Union Tank Car Company. The following year, in 1969, Trans Union purchased Credit Bureau of Cook County (CBCC), entering into the credit business.
In subsequent years, TU continued to purchase major cities’ credit bureaus and exclusive rights with many of their creditors. Their vision was to create a national credit database from what then was not more than simple file cards. TU obtained over 3.5 million of those file cards with their purchase of CBCC alone and continued to combine millions more to create the database they have today.
Trans Union continued to grow and expand their business, most recently purchasing True Credit in 2002. This was their first attempt to sell to consumers directly and has been an ever increasing aspect of their business ever since.
Today Trans Union is based out of Chicago, Illinois, and operates over249 offices nationwide and offices in 25 countries on 5 continents.
Equifax
Equifax is the oldest and largest credit bureau in existence today. They were originally founded in 1898, 70 years before the creation of Trans Union.
Two brothers, Cator and Guy Woolford, created the company. Cator actually got the idea from his grocery business, where they collected customers’ names and evidence of credit worthiness. He then sold that list to other merchants to offset his own business costs.
The success led Cator and his attorney brother, Guy, to Atlanta to start what would become one of the most powerful industries in existence today.
Retail Credit Company was born, and local grocers started using the Woolford service, which expanded rapidly. By the early 1900s the service had expanded from grocers to the insurance industry.
Retail Credit Company continued to grow into one of the largest credit bureaus by the 1960s, with nearly 300 branches in operation. They collected all kinds of consumer data, even rumors about people’s marital lives and childhood. They were also scrutinized for selling this data to just about anyone who would buy it.
In the late ‘60s, Equifax started to compile their data onto computers, giving many more companies access to purchase this data. They also continued to purchase many more of their smaller competitors, becoming larger and also attracting the attention of our Federal government.
In response, the US Congress met in 1971, and enacted the Fair Credit Reporting Act. This new law was the first to govern the information credit bureaus and regulate what they were allowed to collect and sell. Equifax was charged with violating this law a few years later and even more government restrictions were implemented.
Equifax was no longer allowed to misrepresent themselves when conducting consumer investigations and employees were not given bonuses anymore based on the negative information they were collecting, which was standard practice in the past.
It is alleged that due to the tarnished reputation all this left on Retail Credit Company, they changed their name to Equifax (Equitable Factual Information) shortly after in 1979.
Throughout the 1980s, Equifax along with Experian and Trans Union, split up the rest of the smaller credit rating agencies amongst them, adding 104 of those to Equifax’s portfolio. They then continued to grow, taking aligning with CSC Credit Services and another 65 additional bureaus.
Equifax has continued to grow, now maintaining over 401 million consumer credit records worldwide. They also expanded their services to direct consumer credit monitoring in 1999. Today Equifax is based out of Atlanta, Georgia, and has employees in 14 countries.
Experian
Experian was formerly a division of TRW, an automotive electronics giant. TRW was originally founded in 1901 as the Cleveland Cap Screw Company. They started producing screws and bolts and grew to produce many parts for the aviation and automobile industry.
In the early 1960s, TRW started a consumer credit information bureau, collecting and selling consumer data, and eventually became known as TRW Information Systems. TRW Information Systems continued compiling data and were the first to start offering consumers direct credit report access in 1986.
In 1991, rampant problems started appearing with TRW reported credit data. Thousands of people in a town in Vermont had tax liens inaccurately reporting against them. Similar cases started appearing in the entire northeast, forcing the deletion of countless tax liens across the states of Vermont, Rhode Island, New Hampshire, and Maine
Dozens of law suits were filed against TRW, claiming sloppy procedures to create credit files, lack of response to consumer complaints, and re-reporting previously deleted incorrect data. All cases were settled out of court.
Then TRW created a database known as the Constituent Relations Information Systems (CRIS). This system’s sole purpose was to gather personal data on 8,000 politicians who had an opinion of TRW.
In 1996, TRW was purchased for over 1 billion dollars by a private group of investors, and then acquired by CCN, the largest credit reporting company in the United Kingdom. Their name was also changed to Experian.
Today, Experian offers their services in over 65 countries, employing over 15,000 people and has their main headquarters in Dublin, Ireland. Their stock is sold on the London Stock Exchange.
Innovis
Innovis once was ACB Services and was founded in 1970. Innovis is not used by many creditors, at all. Verizon is one of the main creditors who still do use Innovis. But Innovis is said to be the first CRA to use databases and automation to capture and store consumer data.
Fannie Mae and Freddie Mac, as of 2001, started requiring that mortgage companies also report to Innvois, which was a huge step for their future. Innovis offers two main services including a list of people who have recently changed addresses and another list of consumers who have a challenged credit history.
Since 1898, when Equifax began, companies have been collecting and selling consumer data. Today the three major credit bureaus all house hundreds-of-millions of profiles for individual consumers.
