Equifax

Company Information

• Date founded: 1899
• Industry: Credit assessment; analytics
• Corporate Headquarters: Atlanta, Georgia
• Type: Public

Overview

Equifax is an American company specializing in gathering, analyzing, and assessing consumer credit information. This information is sold to individuals and businesses for the purposes of assessing creditworthiness and directing personal and business financial decisions. It is one of the three top credit agencies in the United States; the others are TransUnion and Experian.

The Atlanta, Georgia-based company also uses the data it gathers to provide information on consumer demographics to businesses. In the twenty-first century, Equifax has also expanded into fraud and identity theft protection services, offering these directly to consumers in addition to its credit monitoring services. While based in the United States, the company does business in about twenty-four countries in the Americas, Asia, and Europe. It had a reported annual revenue of more than $5.2 billion in 2023.

History

The company has its origins in 1898 as part of a Tennessee grocery business owned by brothers Cator and Guy Woolford. At the time, many stores let their customers buy groceries on credit, keeping a list of each purchase and recording payments when made. In 1898, the brothers, originally from Maryland, began compiling a list of their customers based on how likely they were to pay their grocery bills. They used this to decide who should be allowed to buy on account.

In 1899, the brothers moved to Atlanta to focus on this new aspect of their business. They compiled lists of customers and their creditworthiness and began selling them in book form to other businesses. These stores then decided whether to do business with customers based on the ranking given to them by the Woolfords. They called this precursor of Equifax the Retail Credit Company. It lost $2,000 in its first year, but the company grew in popularity the next year.

This encouraged the Woolfords to expand into the life insurance market in 1901, where they entered a line of business known as moral hazard assessment. Their growing company gathered information on not only how reliable people were in paying their bills but other aspects of their behavior as well. This included information on where people went to school, whether or not they were married and to whom, and where and for how long they were employed. Companies began relying on this information to make business decisions related to these customers.

Over the next several decades, the Retail Credit Company added automobile liability insurance to its business. The company itself continued to grow and expand. By 1920, it had almost forty offices across the United States; a decade later, it had more than doubled that to eighty-one. Throughout this time, the information gathered by the company was carefully recorded on index cards and kept in manual files.

This changed in the 1960s as the company had grown exponentially in the years following the end of World War II (1939–1945). By this time, the Retail Credit Company had more than 1,400 sub-offices across the country. As computers and electronic technology became available, the company transitioned its files to these new methods.

While businesses increasingly relied on services like those provided by the Retail Credit Company, consumers were often frustrated and upset by their practices. It was difficult for people to access the information in their credit reports. In addition, at times, some of the information the reports contained was wrong or had little connection to a person’s ability to meet their financial responsibilities. This began to change when Congress passed the Fair Credit Reporting Act of 1970, which took effect in April 1971. The act provided government oversight for how credit bureaus such as the Retail Credit Company did business.

During the 1970s, the company expanded several times through acquisitions of smaller regional bureaus in California, Idaho, Oregon, and Washington, D.C. It was also the target of numerous complaints from customers about how it did business and was cited for a number of violations of the Fair Credit Reporting Act during the 1970s. Before the end of the decade, the company changed its name to Equifax, a name said to derive from the phrase “equitable and factual information.” Some analysts suggest the name change was undertaken in part to distance the company from the number of complaints that had been received.

At the same time, the company changed some aspects of its business. It hired people whose primary job was to assess the way the company protected consumer information. It began selling its credit reports directly to consumers, enabling them to see first-hand what was affecting their credit scores. This allowed people to take steps to correct or improve their scores. These scores are used by businesses for everything from approving loans and forms of credit to pricing interest on loans, insurance premiums, and other services.

By the end of the 1980s, Equifax had offices in all fifty United States and held information on more than 150 million individuals. The company further expanded in the 1990s by purchasing existing companies in the United Kingdom, Canada, Europe, and South America, among others.

With the rise of the digital age in the late twentieth and early twenty-first centuries, Equifax expanded its business to include identity management and fraud services as well as analytical services for businesses to monitor growth.

Impact

Equifax is a powerhouse in the credit reporting business. It employs more than 13,000 employees in about twenty countries and did about $5.2 billion in business in 2023. However, the company continues to have issues that affect its reputation. It has been affected by numerous data breaches and cyber-attacks throughout the early twenty-first century. As a result, Equifax has come under criticism for having lax security practices and for delays in notifying those affected that their information may have been compromised.

The company was asked by industry regulators to change its practices and enhance its cybersecurity after it issued temporary employee passwords that were too easily guessed by hackers. In 2016, a similar breach occurred when it was revealed that hackers were able to guess employee security question answers and gain access to tax data on file for customers. A significant data breach occurred in 2017 when the personal financial information of as many as 143 million Americans was potentially exposed. The company was criticized for waiting several months to go public with information about the breach. In December 2022, the Federal Trade Commission announced Equifax had reached a settlement regarding the 2017 data breach, agreeing to pay $425 million of consumer restitution funds to those affected.

In 2023, Equifax expanded its global reach by aquiring Boa Vista Serviços, a Brazilian credit bureau that provided credit reporting services, risk management, and business intelligence, for approximately $640 million.

In 2022, Equifax was sued in a class-action lawsuit for inaccurate credit scores for potentially millions of consumers. The case was filed in a district court in Georgia by Nydia Jenkins, who claimed that her credit score dropped by 130 points, resulting in a substantially higher monthly car payment. On January 17, 2025, in light of the inaccurate reports, the Consumer Financial Protection Bureau (CFPB) imposed a $15 million penalty on Equifax for a lack of thorough investigation of consumer credit report mistakes. This penalty was a fine, not a lawsuit settlement, that went to the CFPB’s victims relief fund, which is used to help those who have been financially harmed by companies that break federal consumer financial protection laws.

Bibliography

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