Modern credit began long ago at the store level with local business owners such as grocers, clothiers and feed stores. Merchants would keep records on customers who preferred or needed to pay for purchases at the end of a month or other cycle (like when the corn was harvested and sold). A good repayment record was rewarded with access to credit when it was needed. This increased sales and fostered business. Sometimes the merchants in the same town would exchange information about credit customers. And it wasn’t just information about their credit status that was shared. Customers’ marriages, drinking habits and arrests were also noted and exchanged. In most cases, credit was extended to people the merchant knew personally.
By the 1950s and 1960s, credit reporting businesses were formed at the town and county level, and those businesses bought and resold credit histories on behalf of creditors such as banks and retailers. These early bureaus typically kept only negative information on consumers and exchanged information only with creditors. The different companies also did not share information with the other companies outside their specific areas of interest. As businesses began to operate regionally and nationally, they needed credit data on a national level. The need for a central hub for credit information also grew.
Equifax was the first of the big three to be founded. It began in 1899 as the Retail Credit Co. by two brothers who kept customer credit histories for their local Retail Grocers Association. TransUnion was established in 1968, followed by Experian in 1996. The three agencies bought existing local agencies as they grew into the dominant national organizations you know today.
Each of the bureaus maintains its own proprietary database, creates its own credit scores and receives consumer credit information from creditors. Not all creditors report to all three bureaus, so your credit reports may vary slightly from each of the bureaus.
The Fair Credit Reporting Act, or FCRA, and the Fair and Accurate Credit Transactions Act, or FACT, grant the public access to information supplied to the credit bureaus. The FCRA also protects the accuracy of the information reported and limits the collection of data to only credit accounts, public records, name, address, date of birth and Social Security number. The credit bureaus cannot store any data on lifestyle choices, religion, political affiliation, medical history, friends or national origin.
You can access your credit reports for free from each of the three bureaus once each year, and the AnnualCreditReport.com website can provide you with free copies of your credit reports. If you're interested in learning more about your credit score, Bankrate can help with that here.
I recognize that the bureaus could be a lot more responsive and user friendly. However, having one supplier of anything tends to end badly for the consumer. In a free market, bad service tends to foster competition, innovation and improvement.
I hope that answers your question. Good luck!