What we were able to surmise after researching this topic is that credit reporting, as an organized business, came about as a result of lenders needing a way to measure a client's creditworthiness. Many years ago, this wasn't a necessary service. People did all or most of their business at their local bank. But, like in many areas of our lives, progress has changed and complicated this banking relationship. The advent of computers allowed for new credit instruments like credit cards to come into existence. Computers allowed banks and other companies to communicate with each other and to transfer money and information back and forth easily and quickly. During this revolution, people became more mobile, moving from one part of the country to another with little more thought than packing the car and going.
Because of this expanding client base, lenders required an effective means of determining an individuals credit history. To service this need, several large companies set up credit reporting bureaus. With just a few central repositories of data and several branch offices, any lender could find out all about your credit history. A lender could also update the credit report at these credit bureaus to reflect the current status of any loan or account with them.
Today we have three credit reporting giants: Experian (formerly TRW), Equifax and TransUnion. These credit repositories keep records on millions of individuals and hundreds of millions of accounts over a huge span of time. It is estimated that the credit bureaus maintain more information then any other repository of information on earth, including the IRS.
