When Did Credit Scores Start


In today's world, credit scores play a crucial role in financial transactions and decisions. But have you ever wondered when credit scores first came into existence? In this comprehensive article, we will delve into the history of credit scores, exploring their origins, development, and significance. Join us on this journey through time as we uncover the story of "When Did Credit Scores Start."

When Did Credit Scores Start?

The concept of credit scoring dates back to the late 19th century. However, it wasn't until the 1950s that modern credit scoring systems began to take shape. Let's take a closer look at the key milestones in the evolution of credit scores.

1. Early Beginnings (Late 19th Century)

  • Credit Scoring's Inception: The idea of assessing creditworthiness through a standardized system emerged in the late 1800s. Businesses and lenders needed a reliable method to evaluate potential borrowers.

2. The Birth of the FICO Score (1956)

  • FICO Emerges: In 1956, engineer William R. Fair and mathematician Earl J. Isaac founded Fair, Isaac, and Company (now known as FICO). They introduced the first credit scoring system, known as the FICO score, which became the industry standard.

3. Computerization and Automation (1960s-1970s)

  • Technological Advancements: The advent of computers in the 1960s and 1970s revolutionized credit scoring. Automated systems allow for faster and more accurate assessments of creditworthiness.

4. Introduction of the Credit Reporting Act (1970)

  • Legal Framework: The U.S. government recognized the importance of regulating credit reporting agencies and enacted the Fair Credit Reporting Act (FCRA) in 1970. This legislation aimed to ensure fair and accurate credit reporting.

5. FICO's Dominance (1980s-Present)

  • FICO's Continued Influence: The FICO score remained the dominant credit scoring model, with minor updates over the years. It became the gold standard for lenders across various industries.

6. Credit Bureaus and Credit Reports

  • Role of Credit Bureaus: Credit bureaus, such as Equifax, Experian, and TransUnion, collect and maintain credit information on individuals. Credit reports became an integral part of credit scoring.

7. Scoring Models Diversity (21st Century)

  • New Scoring Models: In the 21st century, alternative credit scoring models emerged, incorporating non-traditional data sources like rent payments and utility bills. These models aimed to provide a more comprehensive view of a borrower's creditworthiness.

Frequently Asked Questions (FAQs)

What is a credit score?

A credit score is a numerical representation of an individual's creditworthiness. It is used by lenders to assess the risk associated with lending money to a borrower.

How is a credit score calculated?

Credit scores are calculated based on various factors, including payment history, credit utilization, length of credit history, types of credit accounts, and recent credit inquiries.

What is a good credit score?

A good credit score typically falls within the range of 700 to 850, depending on the scoring model. Higher scores indicate a lower credit risk.

Can I improve my credit score?

Yes, you can improve your credit score by making on-time payments, reducing credit card balances, and avoiding excessive credit applications.

Are credit scores used for more than just loans?

Yes, credit scores are used in various financial transactions, including renting apartments, obtaining insurance, and even during job applications for certain positions.

How can I check my credit score?

You can check your credit score through credit bureaus or various online platforms that provide free credit score monitoring services.


The journey of credit scores, from their humble beginnings in the late 19th century to their pivotal role in today's financial world, is a testament to human innovation and the need for standardized systems in a complex society. Understanding "When Did Credit Scores Start" helps us appreciate the importance of financial responsibility and the impact of credit in our lives.

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