When Did Credit Scores Start?

Modern credit scoring began in the 1950s.

Early mathematical models were created to help lenders predict whether borrowers would repay their debts. Credit reporting itself is much older. Systems for collecting information about borrowers date back to the 1800s.

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What Came Before Credit Scores?

Before modern credit scores existed, lenders relied more heavily on credit reports and their own judgement.

Credit reporting systems began developing during the 1800s. These early reports collected information about a person's finances and reputation. The process was much more subjective than today's scoring systems.

When Were Modern Credit Scores Invented?

Modern statistical credit scoring started taking shape during the 1950s.

The first commercial credit risk models appeared near the end of that decade. These models used mathematics and borrower data to help lenders make more consistent lending decisions.

When Did Credit Scores Become Widely Used?

Credit scoring became much more standardized during the 1980s and 1990s.

A standardized cross-bureau consumer credit score was introduced in the United States in 1989. This helped lenders evaluate borrowers using a more consistent scoring system.

Credit bureaus also became increasingly computerized during this period. This made it easier to collect and analyze large amounts of consumer credit information.

When Did Credit Scores Start in Canada?

Canada's modern credit reporting system also developed over several decades.

One of Canada's two major credit bureaus began Canadian operations in 1989. Today, Canadian lenders commonly use credit reports and scores when assessing applications for products such as credit cards, mortgages and personal loans.

Why Were Credit Scores Created?

Credit scores were created to give lenders a faster and more consistent way to measure credit risk.

Instead of reviewing every borrower manually, lenders could use information from a credit report to estimate how likely someone was to repay borrowed money.

Today, your credit score can be influenced by factors such as:

• Payment history

• Amount of debt

• Credit utilization

• Length of credit history

• Recent credit applications

• Types of credit accounts

Credit scores have changed considerably since the first models appeared in the 1950s. The basic purpose remains the same. They help lenders evaluate the risk of lending money.