The History of the Credit Repair Industry and Why It’s Still Important Today

Why does the credit repair industry exist? It’s actually pretty simple. As long as data is being collected for credit reports, there’s room for mistakes. And those mistakes can have a big impact. They could be the difference in someone qualifying for different credit lines or not.

So credit repair, consumer credit and credit bureaus—they’re all tied together. To understand why they’re so important, you might want to learn a bit more about the history of credit scores and repair. Luckily, we’ve compiled everything you need to know about the history of the credit repair industry. 

The History of Consumer Credit Is Centuries Long

Debt isn’t anything new. In fact, it’s been around for at least a millennium. One anthropologist has traced the concept of credit systems back at least 5,000 years.

    Call now for a FREE consultation
    CALL 844-639-6956

    The concept of credit reporting may be almost as old. While creditors weren’t looking up someone’s history of debt and payments, many lenders did take risk-mitigation actions. For example, in early America, shopkeepers asked neighbors or others in the community to vouch for someone who wanted credit at their store.

    It was a much more simplified version of the credit scoring and reporting system used today, but the goals were similar. Creditors want to know if a person is a good “bet.” In other words, they want to know if you’ll pay a loan back on time and if your history indicates that you’ll be a risk. 

    The History of the Credit Bureaus: A Brief Time Line

    As population and credit needs grew, the ability to check if whether someone was a risk or not became complicated. In many cases, you couldn’t just ask neighbors for references. Companies began to create products and processes to solve this challenge. That process began the history of the credit bureaus. Here’s a quick timeline:

      Get everything you need to master your credit today.
      Get started for free
      • 1950s: Local bureaus began to track credit-related behaviors of consumers in a single town or community. Typically, these organizations were cooperatives made up of area businesses. They simply reported on negative credit behaviors to warn each other. The agencies might also collect negative information from local newspapers.
      • 1960s: Credit reporting bureaus “sponsored” by banks or other financial institutions didn’t share information outside of their networks. That limited the accuracy and completeness of any report with one of these organizations. It also impacted some people’s ability to get credit with new lenders.
      • 1970s: The Fair Credit Reporting Act was passed. The industry stopped reporting events such as arrests or marriages. Instead, it began concentrating on creating accurate reporting specifically for credit. Over this decade several leaders emerged in the credit reporting space, including TransUnion and the bureau that would eventually become Experian.
      • 1980s: Electronic storage supported increased accuracy and completeness of credit reports. Credit reporting agencies evolved from local or regional bureaus into national, integrated systems. It became possible for lenders to receive electronic information about a person’s credit quickly in the form of a fax.
      • 1990s and beyond: The internet made credit reporting even faster and provided increased access to consumer credit reports and scores.

      The History of the Credit Repair Industry

      As soon as modern credit reporting was created, the pressure to have a good financial record and credit history increased. And that meant it was more important than ever for credit reports to be correct. 

      Financial Mistakes Didn’t Have the Same Weight

      Historically, if you made a financial mistake, it might not have far-reaching consequences. Credit reporting, even through much of the 20th century, was localized. If you moved, you might reset your credit reputation.

      Plus, banks and lenders weren’t tied to credit scores like they are now. Today, financial institutions have rules and policies to comply with different regulations and to protect their bottom lines. In the past, bankers were more willing to work with someone with a poor credit history, choosing to lend them money based on their knowledge of a situation. 

      Even so, many people didn’t know what was in their credit report. And when they did get a look at it, they sometimes found the report was mistaken. It’s not surprising. Even today, the Federal Trade Commission notes that 20% of Americans have an error on their report.

      Enter the Credit Repair Industry

      Today, you can find information on how to repair your credit online and access numerous tools for doing so via the internet. But this wasn’t always the case. Credit repair companies began to pop up to help consumers get errors on their credit reports corrected. Some companies also began offering consumer financial education to teach how to manage credit.

      The Credit Repair Industry Today

      The credit repair industry is alive—and thriving—today. It’s evolved over the last few decades, and many people misunderstand what these organizations really do. If your credit report has an error, a reputable credit repair agency can provide valuable tools and assistance to get the problem corrected.

      Not sure how to repair your credit? Let ExtraCredit help. Use Restore It—one of ExtraCredit’s features—to connect to some of the best credit repair leaders around. They can take a look at your credit history, and help you tackle any inaccurate or unfair negative items you may have on your credit report.

        Get everything you need to master your credit today.
        Get started for free

        Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

        Hello, Reader!

        Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

        Our People

        The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

        Our Reporting

        We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

        The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

        In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

        Our Business Model

        Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

        Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



        Your Stories

        Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

        Thanks for stopping by.

        - The Credit.com Editorial Team