What do you think?
Rate this book
Columbia Studies in the History of U.S. Capitalism
Creditworthy: A History of Consumer Surveillance and Financial Identity in America
The first consumer credit bureaus appeared in the 1870s and quickly amassed huge archives of deeply personal information. Today, the three leading credit bureaus are among the most powerful institutions in modern life--yet we know almost nothing about them. Experian, Equifax, and TransUnion are multi-billion-dollar corporations that track our movements, spending behavior, and financial status. This data is used to predict our riskiness as borrowers and to judge our trustworthiness and value in a broad array of contexts, from insurance and marketing to employment and housing.
In Creditworthy, the first comprehensive history of this crucial American institution, Josh Lauer explores the evolution of credit reporting from its nineteenth-century origins to the rise of the modern consumer data industry. By revealing the sophistication of early credit reporting networks, Creditworthy highlights the leading role that commercial surveillance has played--ahead of state surveillance systems--in monitoring the economic lives of Americans. Lauer charts how credit reporting grew from an industry that relied on personal knowledge of consumers to one that employs sophisticated algorithms to determine a person's trustworthiness. Ultimately, Lauer argues that by converting individual reputations into brief written reports--and, later, credit ratings and credit scores--credit bureaus did something more profound: they invented the modern concept of financial identity. Creditworthy reminds us that creditworthiness is never just about economic "facts." It is fundamentally concerned with--and determines--our social standing as an honest, reliable, profit-generating person.
Table of contents
Introduction
1. "A Bureau for the Promotion of Honesty": The birth of the systematic credit surveillance
2. Coming to terms with credit: The nineteenth-century origins of consumer credit surveillance
3. Credit workers unite: Professionalization and the rise of a national credit infrastructure
4. Running the credit gantlet: Extracting, ordering and communicating consumer information
5. "You are judged by your credit": Teaching and targeting the consumer
6. "File clerk's paradise": Postwar credit reporting on the eve of automation
7. Encoding the consumer: The computerization of credit reporting and credit scoring
8. Database panic: Computerized credit surveillance and its discontents
9. From debts to data: Credit bureaus in the new information economy
Epilogue
Notes
Selected bibliography
Index
In Creditworthy, the first comprehensive history of this crucial American institution, Josh Lauer explores the evolution of credit reporting from its nineteenth-century origins to the rise of the modern consumer data industry. By revealing the sophistication of early credit reporting networks, Creditworthy highlights the leading role that commercial surveillance has played--ahead of state surveillance systems--in monitoring the economic lives of Americans. Lauer charts how credit reporting grew from an industry that relied on personal knowledge of consumers to one that employs sophisticated algorithms to determine a person's trustworthiness. Ultimately, Lauer argues that by converting individual reputations into brief written reports--and, later, credit ratings and credit scores--credit bureaus did something more profound: they invented the modern concept of financial identity. Creditworthy reminds us that creditworthiness is never just about economic "facts." It is fundamentally concerned with--and determines--our social standing as an honest, reliable, profit-generating person.
Table of contents
Introduction
1. "A Bureau for the Promotion of Honesty": The birth of the systematic credit surveillance
2. Coming to terms with credit: The nineteenth-century origins of consumer credit surveillance
3. Credit workers unite: Professionalization and the rise of a national credit infrastructure
4. Running the credit gantlet: Extracting, ordering and communicating consumer information
5. "You are judged by your credit": Teaching and targeting the consumer
6. "File clerk's paradise": Postwar credit reporting on the eve of automation
7. Encoding the consumer: The computerization of credit reporting and credit scoring
8. Database panic: Computerized credit surveillance and its discontents
9. From debts to data: Credit bureaus in the new information economy
Epilogue
Notes
Selected bibliography
Index
368 pages, Hardcover
Published July 25, 2017
21 people are currently reading
389 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 7 of 7 reviews
May 12, 2017
This is a fascinating and deeply detailed account of a subject most of us do not think about, Consumer Credit and how that information is tracked. While it was interesting to learn the history of credit tracking and rating in America I felt that the the non-linear narrative made the book hard to get in to as the timeline would advance and then retreat to pick up some point from previous years. While thoroughly researched with an unquestionable eye for detail I felt that some of the detail could have been condensed for the benefit of the casual reader who may have find the more minute details unimportant to the overall story.
May 31, 2018
A bit academic, but totally fascinating history of the history of credit bureaus—essentially a private surveillance network. And not just credit scores, but since character determines credit, anything else.
Or at least at a time it was. The book holds back on the extent of the data the current credit monitoring system of the big three (Experian, Equifax, and TW) really do hold. It's hard not to assume that the private spying done in the earlier part of the century hasn't continued.
And also an interesting technological history, as I didn't realize they were at the forefront of modern computing, from punch cards to massive database systems. And how that marches in lockstep with the growth of credit.
Oh, and you get a taste of the dark science of actuarial work, because if there is some demographic marker that determines if someone is creditworthy, lenders will absolutely lean on it.
Or at least at a time it was. The book holds back on the extent of the data the current credit monitoring system of the big three (Experian, Equifax, and TW) really do hold. It's hard not to assume that the private spying done in the earlier part of the century hasn't continued.
And also an interesting technological history, as I didn't realize they were at the forefront of modern computing, from punch cards to massive database systems. And how that marches in lockstep with the growth of credit.
Oh, and you get a taste of the dark science of actuarial work, because if there is some demographic marker that determines if someone is creditworthy, lenders will absolutely lean on it.
October 11, 2017
Very interesting book demonstrating that lots of business practices of collecting private data and using it for financial benefit we think of as new has roots a century and a half old, albeit with less well organized technologies. Credit based on assessment of moral characteristics and behavior, its proponents said, was necessary to allow people without capital to take risks and make it big, in contrast to corrupt European aristocrats where access to credit relied on capital reserves. With the decline of trust and personal relationships in a larger commercial economy, credit reporting was a way of replacing those guarantors of good behavior, first by the credit bureau’s own personal knowledge/knowledge attained from local merchants and later from more formalized statistics. Some resisted this “espionage”; libel suits were always a threat.
The credit reporting industry was fragmented until the 1980s, enabling the more pervasive surveillance of today, but the old surveillance tried for comprehensiveness and had some sophisticated features, including targeting those who showed up as good risks for more offers of credit by the 1920s. Nineteenth-century sellers were just as aware as those today that offering credit makes buyers spend more liberally. At the same time, many retailers really wanted cash only policies, because of the risks of extending credit; the ability to extend credit and take a few losses along the way provided larger businesses with a comparative advantage, and retail credit management was intimately connected to the rise of department stores. By the 1930s, stores were studying good customers’ habits and sending them letters directing them to departments they might’ve overlooked—a way, Lauer argues, of restoring personalization to what had become impersonal relationships, but without needing a helpful clerk on the seller’s end. Which sounds a lot like today’s automated targeting, too.
Creditors’ and potential creditors’ intrusions into privacy were justified because of the moral claim of the creditor against a debtor. And the absence of consumer resistance to these privacy intrusions then, as now, “baffled credit bureau officials and credit managers,” especially given business resistance to disclosing similar information in the nineteenth century for business-to-business credit purposes. While many consumers resisted disclosing negative information in personal interviews, they’d tell a lot more to an impersonal form.
Credit bureaus also evaluated creditworthiness and classified people by relative risks, almost from their inception—creditworthiness isn’t as much about ability to pay as it is about readiness to pay. “Since wealth ensured nothing and character was a variable impossible to isolate or measure systematically, credit professionals turned to other metrics to predict trustworthiness.” Occupation was a primary one—teachers good, policemen and firemen not so much because “they feel that the public is under obligation to them and hence they take all the time they want to pay their debts.” Race (and nationality, determined by checking the applicant’s first name) was another standard means of classification.
Formalization came as part of the 19th century vogue for statistics and accounting; it was supposed to make differently worded, qualitative reports of reputation more reliable and comparable. Ratings came from no one in particular and appeared objective. Similarly, installment contracts with standardized wording displaced informal credit relationships between local retailers and trusted customers. Later, information culled from sources like newspaper clippings was dropped from credit reports as statistical credit scoring emerged, relying on preselected categories and not trying to get “a full picture” of the individual consumer. Social and economic stability—having a telephone in the house, having a savings account—could be measured directly where character could not. Quantifying credit risk also allowed lenders to begin experimenting with variable interest rates, so even late-paying customers could be made profitable. Early statistical systems, unsurprisingly, were distrusted by experienced “credit men” (and sometimes women), but there just weren’t enough of those trained professionals to cope with the exploding demand for credit. Credit scoring promised to reduce subjectivity and bias, even as it encoded the larger effects of bias into credit scores: “statistical credit scoring could not end discrimination by excluding superficial personal characteristics because gender and racial inequalities were woven directly into the fabric of American society.”
Local data often outstripped the information available to the (much smaller) state, and the FBI and IRS, among others, turned to credit bureaus for help. Lauer also discusses the self that credit reporting tried to construct: one engaged in monitoring itself-as-consumer, especially its capacity for repayment of debt. And creditworthiness is a moral judgment too; consumers’ beliefs in its morality helps get them to pay. Or at least, the professionals Lauer studied believed that—he points out that his focus on their justifications and practices doesn’t say much about what credit evaluation was like for consumers.
As it turned out, the free market alone didn’t drive the adoption of statistical credit scoring. Lauer points to government antidiscrimination mandates in the 1970s—which, perhaps ironically, drove the practice of using “impersonal” statistical pools to avoid charges of deliberate discrimination—as well as to Fannie and Freddie, which wanted to be able to compare scores of mortgagors in guaranteeing home loans in the 1990s. These government mandates forced previously diffuse sources of credit scoring to come together. But now we have new risk models for everything—whether someone will pay their gas bill may not be the same as whether they’ll pay their phone bill. Coming on the heels of the Equifax breach, Lauer offers a timely reminder that the system has now shifted to consumers the responsibility not only of monitoring their own credit-related behavior but also the responsibility of monitoring their own credit reports.
The credit reporting industry was fragmented until the 1980s, enabling the more pervasive surveillance of today, but the old surveillance tried for comprehensiveness and had some sophisticated features, including targeting those who showed up as good risks for more offers of credit by the 1920s. Nineteenth-century sellers were just as aware as those today that offering credit makes buyers spend more liberally. At the same time, many retailers really wanted cash only policies, because of the risks of extending credit; the ability to extend credit and take a few losses along the way provided larger businesses with a comparative advantage, and retail credit management was intimately connected to the rise of department stores. By the 1930s, stores were studying good customers’ habits and sending them letters directing them to departments they might’ve overlooked—a way, Lauer argues, of restoring personalization to what had become impersonal relationships, but without needing a helpful clerk on the seller’s end. Which sounds a lot like today’s automated targeting, too.
Creditors’ and potential creditors’ intrusions into privacy were justified because of the moral claim of the creditor against a debtor. And the absence of consumer resistance to these privacy intrusions then, as now, “baffled credit bureau officials and credit managers,” especially given business resistance to disclosing similar information in the nineteenth century for business-to-business credit purposes. While many consumers resisted disclosing negative information in personal interviews, they’d tell a lot more to an impersonal form.
Credit bureaus also evaluated creditworthiness and classified people by relative risks, almost from their inception—creditworthiness isn’t as much about ability to pay as it is about readiness to pay. “Since wealth ensured nothing and character was a variable impossible to isolate or measure systematically, credit professionals turned to other metrics to predict trustworthiness.” Occupation was a primary one—teachers good, policemen and firemen not so much because “they feel that the public is under obligation to them and hence they take all the time they want to pay their debts.” Race (and nationality, determined by checking the applicant’s first name) was another standard means of classification.
Formalization came as part of the 19th century vogue for statistics and accounting; it was supposed to make differently worded, qualitative reports of reputation more reliable and comparable. Ratings came from no one in particular and appeared objective. Similarly, installment contracts with standardized wording displaced informal credit relationships between local retailers and trusted customers. Later, information culled from sources like newspaper clippings was dropped from credit reports as statistical credit scoring emerged, relying on preselected categories and not trying to get “a full picture” of the individual consumer. Social and economic stability—having a telephone in the house, having a savings account—could be measured directly where character could not. Quantifying credit risk also allowed lenders to begin experimenting with variable interest rates, so even late-paying customers could be made profitable. Early statistical systems, unsurprisingly, were distrusted by experienced “credit men” (and sometimes women), but there just weren’t enough of those trained professionals to cope with the exploding demand for credit. Credit scoring promised to reduce subjectivity and bias, even as it encoded the larger effects of bias into credit scores: “statistical credit scoring could not end discrimination by excluding superficial personal characteristics because gender and racial inequalities were woven directly into the fabric of American society.”
Local data often outstripped the information available to the (much smaller) state, and the FBI and IRS, among others, turned to credit bureaus for help. Lauer also discusses the self that credit reporting tried to construct: one engaged in monitoring itself-as-consumer, especially its capacity for repayment of debt. And creditworthiness is a moral judgment too; consumers’ beliefs in its morality helps get them to pay. Or at least, the professionals Lauer studied believed that—he points out that his focus on their justifications and practices doesn’t say much about what credit evaluation was like for consumers.
As it turned out, the free market alone didn’t drive the adoption of statistical credit scoring. Lauer points to government antidiscrimination mandates in the 1970s—which, perhaps ironically, drove the practice of using “impersonal” statistical pools to avoid charges of deliberate discrimination—as well as to Fannie and Freddie, which wanted to be able to compare scores of mortgagors in guaranteeing home loans in the 1990s. These government mandates forced previously diffuse sources of credit scoring to come together. But now we have new risk models for everything—whether someone will pay their gas bill may not be the same as whether they’ll pay their phone bill. Coming on the heels of the Equifax breach, Lauer offers a timely reminder that the system has now shifted to consumers the responsibility not only of monitoring their own credit-related behavior but also the responsibility of monitoring their own credit reports.
September 20, 2017
Creditworthy is a book about the history of the credit reporting bureaus in the United States. Starting in the early 1800’s, the book talks about the credit culture that existed between merchants and consumers at the start of our country. The legacy is interesting to anyone with a love of history, but it could have been handled more briefly by the author.
The book takes the reader through American history from the perspective of credit bureaus. Starting out in the 100’s, the credit service provider field has now been narrowed down to 3 major players, Equifax, TransUnion, and TRW. Everyone is probably familiar with Equifax as it was recently in the news for a database breach. Personal information, social security numbers, and driver license numbers from 143 million American consumers was stolen. Equifax, who earns millions of dollars from the sale of consumer financial information, has, to date, avoided financial liability to the people whose credit reputations have been compromised.
Information from credit bureaus is useful to credit providers. Having worked as a credit manager of a major bank, I know how that credit information is ordered and used every time that a new credit application is received, and annually thereafter until the debt is paid. Credit reports assist credit providers by helping them determine the likelihood that a debt will be repaid in a timely manner. If credit bureaus kept to the basic function for which they were designed, providing credit information to entities with a valid credit information needs, their usefulness would be indisputable. When credit applicants supply a bank or creditor with financial information, they expect that information to remain confidential.
Credit bureaus subsequently got into the business of selling mailing lists based using certain credit benchmarks that marketers provide. Those lists are then used to bombard consumer mailboxes and email accounts with credit card and loan offers. The selling of mailing list is a large money maker for credit bureaus. Historically according to Creditworthy, consumers were appalled when they found out that their payment information had been shared. Today, consumers accept that their payment information will be shared with credit bureaus. However, it is not a credit applicant’s intent that the information shared be taken advantage for the financial benefit of third parties to whom they made not credit request. This is misuse and that needs to be regulated. Creditworthy makes the point that the type of surveillance that credit bureaus engage in is something citizens of this country would rail against if done by our government. Yet they seem to accept it from institutions like credit bureaus that are accountable to no one.
Creditworthy’s release at this time was not planned to coincide with a data breach but it comes out with perfect timing. This is the book to read if you’re curious about what credit bureaus like Equifax do and how a company like that could amass so much personal information on American consumers without much notice.
The book takes the reader through American history from the perspective of credit bureaus. Starting out in the 100’s, the credit service provider field has now been narrowed down to 3 major players, Equifax, TransUnion, and TRW. Everyone is probably familiar with Equifax as it was recently in the news for a database breach. Personal information, social security numbers, and driver license numbers from 143 million American consumers was stolen. Equifax, who earns millions of dollars from the sale of consumer financial information, has, to date, avoided financial liability to the people whose credit reputations have been compromised.
Information from credit bureaus is useful to credit providers. Having worked as a credit manager of a major bank, I know how that credit information is ordered and used every time that a new credit application is received, and annually thereafter until the debt is paid. Credit reports assist credit providers by helping them determine the likelihood that a debt will be repaid in a timely manner. If credit bureaus kept to the basic function for which they were designed, providing credit information to entities with a valid credit information needs, their usefulness would be indisputable. When credit applicants supply a bank or creditor with financial information, they expect that information to remain confidential.
Credit bureaus subsequently got into the business of selling mailing lists based using certain credit benchmarks that marketers provide. Those lists are then used to bombard consumer mailboxes and email accounts with credit card and loan offers. The selling of mailing list is a large money maker for credit bureaus. Historically according to Creditworthy, consumers were appalled when they found out that their payment information had been shared. Today, consumers accept that their payment information will be shared with credit bureaus. However, it is not a credit applicant’s intent that the information shared be taken advantage for the financial benefit of third parties to whom they made not credit request. This is misuse and that needs to be regulated. Creditworthy makes the point that the type of surveillance that credit bureaus engage in is something citizens of this country would rail against if done by our government. Yet they seem to accept it from institutions like credit bureaus that are accountable to no one.
Creditworthy’s release at this time was not planned to coincide with a data breach but it comes out with perfect timing. This is the book to read if you’re curious about what credit bureaus like Equifax do and how a company like that could amass so much personal information on American consumers without much notice.
March 18, 2019
As a privacy professional, I consider the threat to personal data as is a new development born of the Internet age. ‘Creditworthy’ does a good job disabusing me of my ignorance. As far back as the mid-nineteenth century, businesses were extending credit to consumers and were looking for assurances that they were extending credit to people they could be certain would pay their bills promptly. At first people were sized up based on the three ‘Cs’ – character, capacity and capital. Much was determined on a subjective basis. Was the person well dressed, did they make good eye contact and did they comport themselves with confidence?
In the early days merchants themselves did the credit checks but as commerce became more wide-flung and sophisticated, a new business based upon credit reporting emerged. At first it consisted of a growing profession of credit managers in the 1900s. And the subjective approach to sizing up credit risks became untenable. That’s when credit ratings came into vogue and credit reporting bureaus become repositories of huge files containing millions of people’s credit history.
This evolution happened beneath the level of cultural awareness. When computers entered the scene in the sixties they changed the nature of the business. By the eighties regional credit agencies merged into large conglomerates and the amount of data these entities held was stunning. The rules about how it was shared between businesses and with the government was poorly regulated. Then comes the Internet and here we are today with some patchwork regulation but laws without much bite. So while the problem isn’t new, the scale and power for harm to individuals has prompted the first push for a comprehensive privacy law. Will this tighten the regulations on credit agencies and financial institutions? Don’t hold your breath.
In the early days merchants themselves did the credit checks but as commerce became more wide-flung and sophisticated, a new business based upon credit reporting emerged. At first it consisted of a growing profession of credit managers in the 1900s. And the subjective approach to sizing up credit risks became untenable. That’s when credit ratings came into vogue and credit reporting bureaus become repositories of huge files containing millions of people’s credit history.
This evolution happened beneath the level of cultural awareness. When computers entered the scene in the sixties they changed the nature of the business. By the eighties regional credit agencies merged into large conglomerates and the amount of data these entities held was stunning. The rules about how it was shared between businesses and with the government was poorly regulated. Then comes the Internet and here we are today with some patchwork regulation but laws without much bite. So while the problem isn’t new, the scale and power for harm to individuals has prompted the first push for a comprehensive privacy law. Will this tighten the regulations on credit agencies and financial institutions? Don’t hold your breath.
August 4, 2025
Really interesting read if you are curious about the history and evolution of credit scoring and mass surveillance/data privacy. Draws from many academic sources but presented in a concise and digestible manner. Learned so many new things, and was shocked many times!!
December 12, 2025
Heavy on details. Light on interesting ones
An economics snoozefest of uninteresting details about the history of the growth of credit bureaus stuffed with too much documentation about how they treated their employees and things like that.
An economics snoozefest of uninteresting details about the history of the growth of credit bureaus stuffed with too much documentation about how they treated their employees and things like that.
Displaying 1 - 7 of 7 reviews