You probably know credit bureaus keep credit reports. But did you know that the information in those reports is provided by lenders and others, and the credit bureau doesn't really have to check it? While everyone involved has a legal obligation to provide fair and accurate information, miscommunications and mistakes occur.
That's where credit repair history comes in. Credit repair, consumer credit, and credit bureaus are all tied together. Learn more about the credit repair industry and the history of consumer credit reporting below.
Debt isn’t anything new, and the concept of credit reporting dates back centuries as well. While creditors weren’t looking up someone’s history of debt and payments via computers, 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 you’ll be a risk.
Over time, as the credit bureaus formed and credit reporting became more organized, the system in place today evolved. These days, you can learn more about what is a good credit score and how to get there by paying attention to important credit scoring factors.
As population and credit needs grew, the ability to check 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:
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. But even today, with modern technology, credit reporting isn't perfect. Credit repair history has its beginnings in this truth.
Some reasons the credit repair industry developed over the past several decades include:
Today, the credit repair industry is alive—and thriving. 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.
It's important to work with a reputable agency, though. Scammers have also evolved alongside the credit repair industry, preying on people who want help fixing their credit by promising the impossible and taking people's money without providing any value.Not sure how to fix your credit? Let ExtraCredit help. Use Restore It—one of ExtraCredit’s features—to connect to some of the leading 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.
Article update. Originally published December 14th, 2020