When Did Credit Scores Start?
8 Min Read | Published: April 25, 2025
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How did credit scores start? Learn how FICO® credit scores marked a new era of accurate, data-driven lending in 1989 and why scores are so crucial now.
At-A-Glance
- FICO® scoring ushered in credit scores in 1989, creating a standardized, continuously evolving way for lenders to assess credit health with real-life data.
- Before credit scores, lending was more subjective and inconsistent, sometimes relying on personal judgment, reputations, and lender-specific evaluations.
- You can monitor your credit score, review your credit report, and stay informed with American Express® MyCredit Guide.
Credit scores are a range of numbers between 300-850 that help to indicate your creditworthiness to lenders. Your credit score can have an impact on your approval and the type of terms you qualify for, whether you’re buying a home or getting a car loan.1
Before the 20th-century credit revolution created credit scores, lending and borrowing were far more subjective compared to today’s standardized, data-driven assessments.2 Let’s explore the history of credit scores to see why so many financial decisions rest on three digits.
When Did Credit Scores Begin?
The Fair Isaac Corporation introduced the FICO® scoring model in 1989, and VantageScore® entered the scene in 2006.3 Before credit scores, many lenders and banks might have relied on personal judgment or company-specific review systems to decide who qualified for a loan, potentially leading to the following:
- Biased, inconsistent lending decisions and practices
- A lack of term transparency that complicated loan comparisons for borrowers
- The rise of loan sharks, who capitalized on lending confusion by exploiting borrowers with high interest rates and using intimidation to collect payments
FICO® and VantageScore® helped to standardize American lender methods for predicting creditworthiness.4 While scoring models aren’t perfect, they use real financial data to standardize fair lending and create predictable, safer borrowing. If you want to begin borrowing responsibly, you can learn how to build credit from scratch with credit cards.
When Did Credit Scores Start Changing?
The Mercantile Agency created the first standardized lender approach to borrower evaluation in 1841, but the method was biased against certain borrowers.5 So, how did credit scores start becoming more accurate and fairer to accommodate the needs of a growing credit reporting industry? Bill and Earl Isaac met this need by founding Fair, Issac and Co. (now known as FICO) in 1956, which would later solidify the FICO scoring model in 1989.6
Why Credit Scores Matter Today
A strong credit score may make borrowing more affordable by helping you qualify for loans, certain credit cards, and mortgages with lower interest rates and more attractive terms.7 To structure those terms, lenders may review your credit report, an outline of your credit health and activity, making it another essential data point in lending decisions.8 Working toward scores above 670, which signals good credit, and striving for excellent scores of 800 or more may significantly improve your credit report and increase your borrowing power.9
What Is the Best Way to Get a Good Credit Score?
Learning how to build credit and maintain good scores takes time, but making small, intentional changes to your credit behaviors can have a positive impact. There is no guaranteed formula for great credit, but these suggestions may help:10
- Make Payment On Time
Payment history is crucial in credit scoring, so staying on top of due dates works in your favor. - Keep Your Balances Low
Lenders consider using too much of your available credit risky. In most cases, you’ll want to keep your credit utilization ratio to below 30%, or even in the single digits if possible. - Keep up with older accounts if you can
A longer credit history may reflect stability, so keeping long-standing accounts open might benefit your score. - Avoid multiple new credit applications at once
Applying for too many accounts at once could lead to hard inquiries, which could temporarily lower your score. Note that this doesn’t apply if the lender or credit card issuer is able to do an initial soft credit check. - Check your credit reports regularly
Errors happen, so catching them can prevent negative effects on your score.
You can learn more about how to get a free credit report to start looking for opportunities for improvement and to scan for any mistakes or errors that could be holding your credit back.
Frequently Asked Questions
While there weren’t firmly established credit scoring systems or uniform scores in the 1970s, systematic creditworthiness evaluations existed as early as the 1840s.11 Unfortunately, these evaluations were flawed, inconsistent, and biased.
An 18-year-old doesn’t start with any specific score solely based on age.12 If you have no experience using or building credit at 18, you might appear to credit reporting agencies as invisible or unable to be scored.13
The FICO Scores we know today did not exist before 1989. However, credit and borrower evaluations date back thousands of years to ancient Mesopotamia.14
The Takeaway
Modern credit scores began in 1989 when FICO created a standardized model to replace inconsistent lending decisions. FICO scoring is continually updated to help lenders assess risk precisely while protecting borrowers. Regularly checking on your credit report can help you understand lender decisions and predictions, giving you an edge when financial planning.
1 “What Is My Credit Score?,” Experian
2 “The History of the FICO® Score,” myFICO
3 “The Difference Between VantageScore® Credit Scores and FICO® Scores,” Experian
4,5,6,11 “The History of Credit Cards,” Experian
7,9 “Why is good credit so important?,” Bankrate
8 “What is a credit report?,” Consumer Financial Protection Bureau (CFPB)
10 “Understand, get, and improve your credit score,” USA Gov
12,13 “What credit score do you start with?,” Bankrate
14 “History Of Credit Cards: When Were Credit Cards Invented?,” Forbes
Liv Gillespie is a Philadelphia-based writer with a double M.A. in English Linguistics & Literature and Secondary Education. Her work focuses on personal finance.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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