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History of Credit Score

Credit scores came into wide use in the 1980s. Prior to that, human judgment was the only way to decide who received credit. Lenders would use their past experience at observing consumer credit behavior as the basis for judging new consumers. This proved to be a slow, unreliable process..


Eventually a standardized process was designed, using a point system that scores the variables on a person’s credit report. This point system helped to standardize these variables and gave a more solid basis to determine whether or not a customer would make a good credit risk.

When statistical models were built that considered numerous variables and combinations of variables credit became even easier to approve. These models were built using payment information from thousands of actual consumers, which made scores highly effective in predicting consumer credit behavior. When combined with computer applications, scoring models made the credit granting process extremely fast, efficient and objective.


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