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These days, consumers generally rely on Experian, Equifax and TransUnion to compile their credit, but it used to be that there were more than just three dominant credit bureaus sharing their information with lenders.

Credit bureaus themselves began popping up in the late 1800s when local merchants, looking to determine whether a loan was likely to be paid back in a timely fashion, started sharing information with one another about borrowers in their region.

Equifax, for instance, was founded back in 1899 by brothers Cator and Guy Woolford, after Cator -- a partner with a Chattanooga, Tenn., grocery store -- was tasked with compiling a list of credit customers' paying habits for the local retail grocers association.

Over time, the Woolfords and those who had started up similar services started sharing and ultimately selling the compiled information in other cities, Maxine Sweet, an Experian spokeswoman, explained. Information was pooled, technology was developed and the big fish started eating the little fish until we ultimately ended up with the reporting system that we have today -- which, it should be noted, extends beyond the three credit bureaus that consumers may be most familiar with.

"There are still some other bureaus and affiliates out there," John Ulzheimer, the president of consumer education for, pointed out. This includes CSC Services, which operates its own credit services division but also services Equifax customers in the Midwest, and Innovis Data Solutions, which was also affiliated with Equifax until it branched out on its own.

Still, the nature of the business and the ever-increasing amount and complexity of information about people's financial habits have kept the number of credit bureaus limited to the current big players.

"Their model is very hard to replicate because, unless you buy one of them, it takes years to build a credit report database," Ulzheimer explained. "And no lender will purchase a credit report from a new credit reporting agency if their data isn't sufficient to make a good lending decision."

More than one score

Experts point out that the real misconceptions about credit reporting (and the problems that result) have less to do with the number of bureaus in operation and more to do with the number of different scores that are available to both lenders and consumers.

While most consumers generally believe there is one standard scoring system -- the common 300 to 850 FICO credit-scoring model -- "there are a number of different scores available for use," pointed out Demitra Wilson, an Equifax spokeswoman.

The assumption of the FICO standard is particularly problematic, since, unless specified, the scores that consumers buy from the credit bureaus aren't even technically their FICO score. In most cases, what they are seeing instead is a score generated by a formula that the bureau itself bought from FICO (based on consumer data supplied by each company) that allows it to assign different weights to different financial scenarios.

"We provide the analytics," Barry Paperno, a manager of consumer operations for, explained. "FICO doesn't actually calculate the score."

FICO is also not the only company that sells a quantitative way to calculate qualitative information. In fact, Sweet points out, pulling your score from Experian and TransUnion through the government-sponsored will actually get you a copy of your Vantage Score, a competitive credit-scoring model that uses the numerical range of 501 to 990, with higher scores representing a lower likelihood of risk. (Equifax provides its version of the FICO score, the Equifax Credit Score.)


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This article was reported by Jeanine Skowronski for MainStreet.