What is a Credit Bureau, What is a Credit Repository, Warning your credit report does not exist.
This is another clip from my speech at Eastern Michigan University. I cover how Trans Union, Equifax and Experian were created. I discuss how Guy Woolford was the father of the modern credit industry. How the two richest people in the world both owned Trans Union, and how D. Van Skilling made 300 Million in just 3 months on Experian.
I also cover what is a credit bureau vs what is a credit repository and how your credit report does not exist.
In 1891 the Interstate Commerce Commission and Sherman Antitrust Act, took aim at the largest monopoly to date, the Standard Oil Company. The Rockefeller Empire expanded it domination of rail transportation by taking over most railcar companies until almost every tank cars operated under Rockefeller’s Union Tank Line. When federal and state governments began trying to dismantle the company, Union Tank Line was an obvious target. On July 14, 1891, the Standard trust out maneuvered the legal assault by creating a “new” Union Tank Line Company, devoted to just transportation. In 1919 Union Tank Line changed its name to Union Tank Car Company and went public on the New York Stock Exchange.
During the great depression Union Tank Car starting buying back thousands of cars from customers that had purchased them earlier and eventually leased them as business recovered, creating an industry that is still in practice today. In 1968 a holding company was created called TransUnion and the Union Tank Car Company, was the folded into it for tax reasons. The next year Trans Union acquired the Credit Bureau of Cook County which manually maintained 3.6 million card files in 400 seven-drawer cabinets regarding the creditworthiness of Chicago area business.
Trans Union Corporation became part of The Marmon Group of companies in 1981. In 1988, TU achieved full coverage in the United States, maintaining information on virtually every consumer in the country. The Marmon Group has been managed by members of the Pritzker family, the quietly wealthy Chicago family that owns Hyatt Corp and many other businesses.
On Christmas Day, Dec. 25, 2007 Warren Buffett’s investment company Berkshire Hathaway acquired Marmon in a deal structured to transfer ownership over several years. Berkshire Hathaway paid $4.5 billion for the initial 60% of Marmon and then an unspecified amount for the remaining 40% over the following five to six years, depending on the future earnings of the company. There you have it; Warren Buffet owns your credit information.
Equifax was founded in 1898 by the Woolford brothers, Cator and Guy. While working at a grocer in Tennessee he finished a list started by the owner of area customers’ credit payment history, for the Grocer’s Association Chattanooga. To cover the costs of the book Cater sold copies of the book to other merchants. Cator and his lawyer brother Guy moved to Atlanta where the Equifax’s headquarters is now.
Relying on his experience in Tennessee, Cator began by seeking out an alliance with the city’s grocers. The Woolford’s copied out credit information on their customers on individual slips on paper, then arranged them into a book. By 1913 Retail Credit had developed a special form for automobile insurance, to be completed by an investigator. The company started providing information to accident insurers and soliciting work related to fire insurance. The Retail Credit Company, Inc., incorporated on December 29, 1913.
In 1923 Retail Credit spun off local consumer credit rating operations and formed a new corporation, Credit Service Exchange. In the early 1930s Retail Credit, having 81 branch offices at its disposal, began studying cost-effective Gathering information by telephone, as well as simplifying forms for recording information, were two of the steps taken towards this end. In March 1930 Retail Credit established the Georgia Credit Exchange to provide services in cities across the state.
The U.S. entry into World War II had a serious impact on Retail Credit’s business. In 1941, the company lost 1,200 workers that went off to serve the country. Retail Credit allowed women to work as inspectors, in most cases permitting wives to take over their absent husbands’ jobs.
By the mid-1960s, nearly 300 branch offices had been opened along with almost 1,400 sub-offices, employing roughly 7,400 inspectors. The company went public in 1965 and during this time, Retail Credit also took its first steps toward automation, converting files written on 3×5 index cards to electronic data systems. Eventually the company’s ability to retrieve information by computer from vast data banks would prove one of Retail Credit’s greatest assets.
Retail Credit changed its name in 1979 to Equifax Inc., derived from “equitable factual information.” The change symbolized the company’s growing capabilities and prepared the way for further diversification of its activities, from operations centered in the insurance industry to wider marketing functions
Also in the late 1970s, Equifax began strengthening consumer credit reporting operations by purchasing small, local credit reporting agencies and by affiliating with others. In doing so, the company expanded its computerized files enormously and paved the way for greater diversification. Likewise, Equifax gained the capability to provide additional types of information to clients.
Consolidation in the credit bureau industry continued throughout the 1980s, In a ten-year period, 104 smaller credit bureaus had been added to the Equifax network alone. By 1986 the company’s files covered 150 million people in 28 states. In the following year, the company’s capacity grew 40 percent, to cover all 50 states.
Experian Information Solutions
The company that became Experian Information Solutions began as a unit of TRW. TRW was founded in 1901 as the Cleveland Cap Screw Co. It began by making cap screws, bolts, and studs, but soon its main product was welded valves for cars made by automotive leader Alexander Winton. The company went through several owners changes until in 1926 when it took the name Thompson Products Inc. At that time it made a variety of parts for both the automotive and aviation industries. In 1958, Thompson Products merged with Ramo-Wooldridge Corp. and took the name Thompson-Ramo-Wooldridge. Ramo-Wooldridge was a leading company in the defense electronics industry. The merged company became a giant in defense and in automotive parts. It invented many key automotive components such as the permanently lubricated steering linkage and the seat-belt pre tensioning device. By the mid-1960s, the company shortened its name to TRW.
While TRW was developing rack-and-pinion power steering and seat belt technology, it also launched a consumer credit information bureau. The company began compiling a consumer database in the mid-1960s. Starting in the mid-1970s, TRW also operated a small-business database. TRW’s information division grew by both internal expansion and acquisition. By the mid-1980s, TRW Information Services, as the consumer credit unit was called, had credit histories on file of approximately 90 million Americans. At that time, TRW Information Services was the largest U.S. credit reporting agency.
D. Van Skilling the president of the TRW Information division and more than 60 other top executives at the unit went in with two leading buyout firms and raised cash to take the Information Systems and Services division private in 1996. The investment group gave TRW $1.01 billion in cash for the credit reporting unit, along with stock adding up to a 16 percent share in the new company. At the time of the sale, the unit was bringing in about $540 million in annual revenue. TRW was pleased, claiming the cash would allow the company to make investments in its remaining automotive and aerospace businesses.
The newly independent company took the name Experian. Experian wanted to expand into overseas markets. So Experian made an offer to the British conglomerate Great Universal Stores to buy its credit reporting unit, CCN Group Ltd Great Universal Stores was perhaps best known for its steadfast outerwear unit, Burberrys. CCN had apparently been interested in buying the information services unit from TRW for years, but talks had gone nowhere. When Great Universal Stores received the offer from Experian, it responded by asking to buy Experian for $1.7 billion. Experian’s spinoff from TRW had not been finalized until September 1996, and the offer from Great Universal Stores came in November. The price was right, as it gave the investment group some $500 million over what they had just paid to TRW.