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.
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.
The History of the Credit Bureaus: A Brief Time Line
1950s: Local bureaus began to track credit-related behaviors of consumers in a single town or community.1960s: Credit reporting bureaus “sponsored” by banks or other financial institutions didn’t share information outside of their networks.1970s: The Fair Credit Reporting Act was passed. The industry stopped reporting events such as arrests or marriages.
1980s: Electronic storage supported increased accuracy and completeness of credit reports.1990s and beyond: The internet made credit reporting even faster and provided increased access to consumer credit reports and scores.
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.
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.
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.
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.