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Equifax Inc.

Equifax Inc.


1550 Peachtree Street NW
Atlanta, Georgia 30309
U.S.A.
Telephone: (404) 885-8000
Fax: (404) 885-8988
Web site: http://www.equifax.com

Public Company
Incorporated:
1913 as Retail Credit Company, Inc.
Employees: 4,600
Sales: $1.54 billion (2006)
Stock Exchanges: New York
Ticker Symbol: EFX
NAIC: 561450 Credit Bureaus; 514199 All Other Information Services

Equifax Inc. is one of the largest consumer credit bureaus in the United States. The company collects, organizes, and manages numerous types of credit, financial, public record, demographic, and marketing information related to over 400 million individuals and businesses. Equifax's products and services include consumer credit information, information database management, marketing information, business credit information, decision and analytical tools, and identity verification services. The company has operations in 14 countries across the globe and serves a wide variety of industries including insurance, finance, credit card, banking, retail, and healthcare.

LATE 19TH-CENTURY BEGINNINGS

Equifax was founded in 1898 by two brothers, Cator and Guy Woolford. Cator Woolford got his start in the credit bureau business as a grocer in Chattanooga, Tennessee. There he supervised the compilation of a list of customers, with indications of their creditworthiness, for the local Retail Grocer's Association. To cover the costs of this effort, Woolford sold copies of the book to other merchants. Pleased with the success of his first listing, Woolford set out to make credit reporting his career.

With his brother Guy, a lawyer six years his junior, Cator settled on Atlanta as the site of his new venture. After several visits to the city, the Woolfords rented an office consisting of a single room on the fifth floor of the Gould Building, at 10 Decatur Street, and had the words "Retail Credit Company" printed on the door in large black letters. On March 22, 1899, the company opened for business.

Relying on his experience in Tennessee, Cator began by seeking out an alliance with the city's grocers. Using the ledger books of Atlanta's food retailers, the Woolford's copied out credit information on their customers on individual slips on paper, then arranged them into a book. After a month the task had grown so large that two additional men were hired to assist the Woolfords, and one week later a woman was employed as well. In June the pages of the book were run out on a mimeograph machine and bound between hard covers with the title "Merchant's Guide."

Merchants paid $25 a year to use the book and subsequent credit reports; grocers paid less. Although the company sold seven subscriptions rapidly after one of Atlanta's largest department stores bought the first, by the end of Retail Credit's first year only 37 merchants and 47 grocers had signed on board. The company posted a loss of $2,242.

In the following year, however, the number of customers increased and the company also branched out to other small, fast-growing commercial centers in Georgia. Credit books for Athens, Rome, Columbus, Macon, and Augusta were developed and marketed and a branch office was opened in Augusta. By the end of the company's second year, the staff had expanded to eight and the volume of sales was growing steadily.

EXPANDED INTO INSURANCE-RELATED BUSINESS IN 1901

In June 1901 Retail Credit branched out into another industry, as it began providing so-called moral hazard information on potential policyholders to the Equitable Life Assurance Society. Insurance companies paid much more highly for the information they needed; Retail Credit quickly expanded operations into this lucrative area. In the fall of 1901, the company dispatched a salesman to the Northeast to drum up business in the home offices of the nation's largest insurance companies. Armed with a form showing the information that would be provided about each potential customer, the salesman pulled in a large number of new clients.

As a result of its growing insurance business, Guy Woolford opened a second company office in Dallas, Texas, in March 1902. Woolford relied on a large number of correspondents, primarily lawyers and merchants in small towns across the Southeast, to fill out reports on people trying to get insurance. The following year the company also opened a branch office in Cincinnati.

In April 1903 Retail Credit closed its Augusta office, after clearly noting signs that the branch would not become profitable. The same year, the company split operations between its two main clients, handling retail and insurance reports separately. Different inspectors carried out the two types of investigations. The company's retail credit reporting activities were restricted to the Atlanta area, while insurance activities were delegated a wider scope.

In 1904 a fourth office was opened in Kansas City, Missouri. Soon offices in Chicago and San Francisco came on line. Two years later the San Francisco office was entirely destroyed by earthquake and fire. Despite this setback, geographic expansion continued and New York premises were opened in 1907. Attempts to run facilities in Baltimore, Greensborough, and Philadelphia during this time failed, and the offices were closed.

Retail Credit set a pattern of aggressive development in the life insurance-related business that would later be applied when entering other fields. For instance, in 1908 the company began issuing reports for automobile liability insurers. With only seven branch offices in operation, Retail Credit proclaimed that it provided a "National Inspection Service," providing reliable reports of uniform quality for insurance purposes.

By 1913 Retail Credit had developed a special form for automobile insurance, to be completed by the investigator. The company started providing information to accident insurers and soliciting work related to fire insurance. With the company's sales running at $350,000, the Woolfords decided to incorporate. The enterprise was newly christened the Retail Credit Company, Inc., on December 29, 1913.

By 1915 Retail Credit's earliest work compiling lists of good and bad credit risks in the Atlanta area had dwindled to almost nothing. While this type of operation was inherently local, Retail Credit had become interested in activities that could be pursued on a broader scale. Toward this end, the company opened five new insurance-related offices in that year.

COMPANY PERSPECTIVES


From first opening its doors in 1899, Equifax has a rich heritage and a distinguished track record of market leadership. The road to success has been paved by maintaining a strong focus on strategic growth, product development, and technology innovation to deliver powerful solutions to our customers. Throughout its history, Equifax employees have been guided by a common set of practices and values called "The Equifax Way." These values have established a strong and steadfast foundation for ensuring the highest levels of integrity, trust, ethics, and privacy in all of our business activities.

By the end of the company's second decade of existence, Retail Credit was thoroughly established as a significant partner in the life insurance business. The credit bureau had opened 34 branch offices in the United States and three in Canada, as well. In 1920, however, Retail Credit's insurance business suffered a serious blow when a consortium of insurance companies formed the American Service Bureau to provide members with investigative reports of the sort that Retail Credit supplied. Similarly an agency that had previously limited its activities to claims inspection also joined the fray. The increased competition resulted in a serious slump in Retail Credit's life insurance and credit reporting activities in 1921.

Retail Credit attempted to make up the slack by increasing automobile insurance reporting; by the following year, more than one-fifth of the agency's business was contributed by this division. The company also developed its first form containing questions relating to fire insurance. In the ensuing years, the volume of requests for this new service increased dramatically.

In 1923 Retail Credit spun off local consumer credit rating operations and formed a new corporation, Credit Service Exchange. These activities had long taken place at a different location under separate management; three years later, Retail Credit further severed its connection when the Exchange was sold to businessman L. S. Gilbert. By the end of the decade, however, Retail Credit had opted to reenter the consumer credit reporting business. In the early 1930s Retail Credit, having 81 branch offices at its disposal, began studying cost-effective means of getting back into the commercial credit report business. Gathering information by telephone, as well as simplifying forms for recording information, were two of the steps taken toward this end. Also proving helpful was the advent of credit bureau associations that had begun springing up as the exchange of information between fellow creditors became more common. In March 1930 Retail Credit established the Georgia Credit Exchange to provide services in cities across the state. In 1934 Retail Credit purchased a Brooklyn credit agency, Retailers Commercial Agency, Inc.

Retail Credit moved to professionalize operations in the 1930s, relying less and less on part-time correspondents for information and more often using full-time, company-trained inspectors. By 1937 nearly three-quarters of all the company's inspection forms were being filled out by full-time investigators, operating out of 96 Retail Credit offices in cities across North America.

The U.S. entry into World War II had a serious impact on Retail Credit's business. In 1941, when the war began for the United States, the company was providing 7.5 million reports a year; many of its inspectors, however, were drafted into the military and other employees left the enterprise to engage in war-related endeavors. In the first full year of U.S. military involvement, the company lost 1,200 workers. Pushed to the limit, Retail Credit finally allowed women to work as inspectors, in most cases permitting wives to take over their absent husbands' jobs. By 1944 the volume of reports produced had sunk to six million.

SIGNIFICANT POSTWAR GROWTH

With the robust recovery of the U.S. economy in the postwar years, however, Retail Credit's business revived and grew. The company continued expansion by opening new branch offices throughout the decades following the war. In 1950, 140 locations were providing services. The number grew to 258 over the next ten years.

KEY DATES


1899:
Cator and Guy Woolford's Retail Credit Company opens for business.
1901:
Retail Credit branches out into the insurance industry.
1913:
The company incorporates.
1930:
Retail Credit establishes the Georgia Credit Exchange.
1965:
The company sells stock to the public for the first time.
1971:
Retail Credit's activities in the consumer credit business are regulated for the first time with the passing of the Fair Credit Reporting Act.
1979:
Retail Credit changes its name to Equifax Inc.
1988:
The company establishes a marketing services division.
1997:
Equifax completes the spinoff of ChoicePoint Inc.
2000:
The company acquires R.L. Polk & Co.'s Consumer Information Solutions Group.
2001:
The spinoff of its payment services business as Certegy Inc. is complete.
2004:
The Fair and Accurate Credit Transactions (FACT) Act is passed.
2007:
Equifax announces plans to acquire TALX Corporation.

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 sold stock to the public for the first time in 1965. During this time, Retail Credit also took its first steps toward automation, converting files written on 3x5 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.

In the early 1970s, Retail Credit purchased several competitors, buying credit bureaus in Oregon, Idaho, and California, and Credit Bureau, Inc., located in Washington, D.C. These purchases were subsequently challenged by the Federal Trade Commission (FTC), which claimed that they reduced competition. After a decade-long court battle, Retail Credit was allowed to retain the purchases.

Retail Credit's activities in the consumer credit business were regulated for the first time in 1971, when Congress passed the Fair Credit Reporting Act, effective in April. Under this law, consumers were given the right to gain access to their credit files and correct errors in them. The law also restricted the kinds of information credit bureaus could sell.

Three years later, Retail Credit ran afoul of the new federal regulations and was charged with violating the Fair Credit Reporting Act and the Federal Trade Commission Act. Among other directives given, the U.S. government ordered Retail Credit to stop rating employees by how much negative information they collected on consumers and to stop having investigators misrepresent themselves when conducting inquiries.

BEGAN DIVERSIFYING IN 1979

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. In 1979 the company took a big step in that direction, acquiring Elrick & Lavidge, a Chicago firm that performed marketing surveys, and merging it into the company's Marketing Information Services subsidiary.

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, as Equifax and its two largest competitors, TRW Inc. and the Trans Union Corporation, divided up the nation's smaller credit bureaus amongst themselves. 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.

During this time, Equifax also continued to spend heavily on technological developments for the purpose of keeping data-processing equipment up to date and offering new products to customers with the equipment. Equifax moved into marketing databases, which allowed patrons to target their most likely customers. In April 1988 the company established a marketing services division, whose first project was to develop a direct-mail program to sell home mortgages for a Midwestern insurance company. The company planned to handle all phases of the operation, including selection of potential customers, production of mailing brochures, handling of telephone inquiries, verification of credit applications, and property appraisal. The marketing division had sales of $90 million in the first nine months in operation. Between 1983 and 1988, the company's overall revenues increased by nearly 60 percent, to $743 million, and earnings more than doubled.

In May 1989 Equifax formed a strategic alliance with the fifth largest credit bureau, CSC Credit Services, a division of the Computer Sciences Corporation; the yield was 65 additional bureaus, bringing Equifax's total number of bureaus to more than 300. The company's operations had already been divided into four divisions: insurance information services, its traditional strength; credit services; marketing services, the newest division; and Canadian operations, which were consolidated into one company, Equifax Canada Inc., in June 1989.

OVERCOMING PROBLEMS

Equifax also divested itself of two unprofitable units in 1989, Equifax Insurance Systems and Enercon, Inc. As the 1990s arrived, the company strove to enter the European market. Equifax formed Wescot Decision Systems as a joint venture with marketer Next PLC in the United Kingdom. Late in 1991, the company bought out its British partner to form Equifax Europe.

In addition to formation of a technology division, brought about by the consolidation of the company's activities in that field, Equifax also acquired Telecredit, Inc., a Los Angeles credit bureau that provided check and credit card authorization services, for $457 million in 1990. The company's purchase of Telecredit was complicated by a sizable drop in the value of Equifax stock during 1990, as investors grew concerned about the stability of the company's profits in an economic downturn.

Another concern was growing consumer dissatisfaction. In 1989 Equifax had commissioned a poll that showed that 71 percent of all Americans thought they had lost control over information concerning their lives and 79 percent considered privacy a basic right. Equifax was forced to confront growing consumer hostility in the early 1990s, as watchdog groups contended that credit bureaus' files were often inaccurate and were used in inappropriate ways. As an Equifax executive explained in Business Week, "People see the use of this information as a privacy problem if it goes beyond credit purposes." To make amends, Equifax announced in August 1991 that it would cease using credit information to compile lists for the purposes of direct marketing. The company would also no longer keep tabs on customers' buying histories for the purpose of placing shoppers in a range of categories from "luxury buyers" to "coupon clippers." Four months later, the company spent $9 million to open an elaborate consumer services center that provided information to callers about their credit file in eight languages.

Leaving the direct-marketing business enhanced Equifax's public image without too much sacrifice; the relinquished activities provided only $12 million, or 1 percent of Equifax's revenues. In addition, the company modified the processes for correcting mistakes in its files, making it easier for consumers to set the record straight. In 1991 Equifax also abandoned a planned joint database project with Lotus Development Corporation that would have made available to small businesses a wide array of demographic information at microneighborhood levels; a consumer outcry and negative media attention led to the project's demise. In mid-1992 Equifax agreed to provide consumers with a toll-free number and to begin investigating disputes within 30 days. By taking these steps to mollify the public, Equifax hoped to ward off federal legislation that would mandate costly measures to increase fairness. In addition, the company hoped to avoid the expensive class action suits over its activities that competitors had suffered.

Equifax's image-polishing moves came just as the company's net income had declined from $64 million in 1990 to $5 million in 1991; the general recession had held down demand for credit and credit reports, and a restructuring had cut about 1,900 jobs and resulted in a $19 million charge. Despite Equifax's flat earnings, the company moved past its main competitor, TRW, to seize the lead in market share among credit bureaus in the beginning of 1992. (TRW's credit bureau was spun off as Experian Inc. in 1996.)

Having moved into check verification and credit card processing in the early 1990s, Equifax diversified again in 1992 through the acquisition of Health Economics Corporation, which moved the company into the field of healthcare information. By 1994 Equifax had acquired three more healthcare information firms, giving it a substantial presence in claims processing. With the 1993 acquisition of Integratec Inc., Equifax gained a leading provider of debt collection and other back-office services for credit card issuers and other lenders. In 1994 the company also greatly expanded its international operations through acquisitions and joint ventures, gaining a presence in 12 countries, including Argentina, Chile, Spain, the United Kingdom, and Australia. That year also saw Equifax introduce a record 25 new products. This heightened activity was fueled by the 1993 decision to subcontract the running of Equifax's computer operation to IBM, a move that freed Equifax's large technical staff to develop new ways of packaging the company's data in consultation with its customers.

INTERNATIONAL EXPANSION

In an effort to focus on payment services, credit reporting, and risk management services, Equifax sold its healthcare information business in 1996, just four years after entering the field; then in the following year Equifax spun off its insurance information services group, which had been a part of the company for nearly as long as credit reporting had been. In August 1997 Equifax completed the spinoff of the new publicly traded ChoicePoint Inc.

During this same period, Equifax aggressively expanded overseas. In July 1995 Equifax acquired U.K.-based Infocheck Group Ltd. and TecniCob S.A., a French payment services firm. In June 1996 the company gained full ownership of Transax plc, the largest check guarantee company in the United Kingdom, while in March 1998 it acquired a leading U.K. risk and credit management firm, CCI Group Plc. In Canada, Equifax purchased Collective Credit Bureaus Ltd. and Creditel of Canada Ltd., a credit reporting agency. With opportunities for expansion growing more limited in the developed world, Equifax turned to the Latin American and Asian markets, acquiring full or partial ownership of firms in Chile, India, Argentina, Peru, and El Salvador. During the second half of 1998 Equifax purchased an 80 percent stake in Segurança ao Crédito e Informaçôes, the leading financial information company in Brazil; a 59 percent controlling stake in Unnisa-Soluçôes em Meios de Pagamento Ltda., Brazil's leading credit card processing firm; and a 34 percent interest in Proceda Tecnologia e Informàtica S.A., the second largest outsourcer of information technology in Brazil. Equifax had quickly built up a significant presence in the emerging Brazilian market through a total investment of more than $350 million.

As a new century dawned and the company entered its second century in business, Equifax was busy gaining a toehold in the burgeoning world of Internet commerce. Revenues had reached a record $1.62 billion by 1998, but the outlook was somewhat clouded by the economic uncertainties that had begun with the Asian financial crisis of 1997. Equifax's push into the Brazilian market was challenged by the economic difficulties there, especially the currency devaluation. Nonetheless the company remained one of the key players in the increasingly electronic world of commerce worldwide.

EQUIFAX IN THE NEW MILLENNIUM

Equifax spent the early years of the new millennium intent on transforming itself into a global information technology concern. In 2000, the company added R.L. Polk & Co.'s Consumer Information Solutions Group to its arsenal. The deal gave Equifax access to the largest consumer and demographic database in North America. The company also launched its Equifax Credit Watch product, which according to the company was the industry's first identity theft monitoring device for consumers. From 2000 to 2001, the company acquired 18 credit bureaus.

Equifax continued to bolster its product and service offerings, make key acquisitions, and sign lucrative contracts over the next two years. Equifax Small Business Enterprise was launched as a trade and credit data repository. The company's Personal Solutions business also began operations in Canada and in the United Kingdom. Fourteen credit bureaus were purchased along with the remaining interest in Brazil's largest commercial credit firm.

Equifax underwent a restructuring during this period that included the spinoff of its payment services business as Certegy Inc. in 2001. The company sold off other assets and cut nearly 12 percent of its workforce. Equifax expected to save nearly $20 million as a result of the restructuring.

The Fair and Accurate Credit Transactions (FACT) Act was passed in 2004. The act was created to ensure accuracy of consumer files at reporting agencies and help to reduce identity theft. Equifax took issue with part of this new act, which would allow individuals to obtain one free credit report during a 12-month period. To offset any potential drain on revenue, Equifax teamed up with its customers to collect monies through a regulatory recovery fee. The passing of the act did not appear to have an effect on the company's bottom line. In fact, revenue was up 5 percent in 2004 and earnings per share increased by 35 percent.

The company's financial success continued in 2005 as revenue increased by 13 percent over the previous year. Richard F. Smith came on board as chairman and CEO that year after Thomas F. Chapman retired. Under Smith's leadership, Equifax forged ahead with plans to expand its business both domestically and abroad. During 2005, the company acquired APPRO Systems, an automated credit risk management and financial technologies provider. In 2007, Equifax made a $1.4 billion play for TALX Corp., an employment verification and human resource and payroll services provider. The company eyed the transaction as an important step in its strategy of entering new markets and adding proprietary data sources to its holdings.

Elizabeth Rourke

Updated, David E. Salamie;

Christina Stansell Weaver

PRINCIPAL SUBSIDIARIES

3032423 Nova Scotia Company; Canada Inc.; Acrofax Inc. (Canada); Austin Consolidated Holdings, Inc.; Clearing de Informes S.A. (Uruguay); Compliance Data Center LLC; Computer Ventures, Inc.; Credit Bureau Services, Inc.; Equifax Chile S.A.; Equifax Canada Inc.; Equifax Capital Management, Inc.; Equifax Commercial Services Ltd. (Ireland); Equifax Consumer Services LLC; Equifax Database Services, Inc.; Equifax Decision Systems B.V. (Netherlands); Equifax Direct Marketing Solutions LLC; Equifax do Brasil Holdings Ltda.; Equifax do Brasil Ltda.; Equifax Enabling Technologies LLC; Equifax Europe LLC; Equifax Finance (1), Inc.; Equifax Finance (2), Inc.; Equifax Financial Services; Equifax Information Services LLC; Equifax Information Services of Puerto Rico, Inc.; Equifax Information Technology LLC; Equifax Investment (South America) LLC; Equifax (Isle of Man) Ltd.; Equifax Luxembourg (No. 2) S.À.R.L.; Equifax Luxembourg S.A.; Equifax Marketing Solutions, Inc.; Equifax NewCo, Inc.; Equifax plc (United Kingdom); Equifax Real Estate Mortgage Solutions, LLC; Equifax Receivables Finance LLC; Equifax Secure Ltd. (United Kingdom); Equifax Settlement Services Holding LLC; Equifax South America LLC; Equifax Technology Solutions LLC; Equifax Ventures, Inc.; Inversiones Equifax de Chile S.A.; Light Signatures, Inc.; NAV Acquisition Inc.; New Management Services LLC; Opt-Out Services LLC; Propago S.A. (Chile); Soluciones Veraz Asnef Equifax, S.L. (Spain); The Infocheck Group Ltd. (United Kingdom); Verdad Informatica de Costa Rica, S.A.

PRINCIPAL COMPETITORS

The Dun & Bradstreet Corporation; Experian Group Limited; TransUnion LLC.

FURTHER READING

"Building Credit Globally," Institutional Investor, April 1996, pp. 2728.

Deogun, Nikhil, "Equifax Unveils Plan to Spin Off Insurance Line," Wall Street Journal, December 10, 1996, p. B4.

"Equifax Agrees to Buy Talx," Wall Street Journal, February 15, 2007, p. C4.

"Equifax Inc.: Fourth Quarter to Include $60 Million Revamp Charges," Wall Street Journal, January 11, 2002.

"Equifax Spins Off Payment Services," Mortgage Servicing News, August 17, 2001.

"Equifax to Acquire Direct Marketing Businesses from R.L. Polk," Credit Risk Management Report, February 23, 2000.

Fickensher, Lisa, "Credit Bureaus Reinvent Themselves for Kinder, Gentler, and Wider Role," American Banker, December 29, 1997, p. 1.

, "Equifax Reshapes Itself to Leverage Its Strengths," American Banker, January 5, 1998, p. 11.

Frank, Robert, "Equifax Broadens Its Markets and Boosts Its Bottom Line," Wall Street Journal, September 22, 1994, p. B4.

Jakubovics, Jerry, "Jeff White Helps Equifax Fly High," Management Review, 1988.

Konrad, Walecia, "Credit Reports with a Smile," Business Week, October 21, 1991.

Kraus, James R., "Brazilian Deal Just a Step in Equifax's Push Abroad," American Banker, August 27, 1998, p. 5.

Kretchmar, Laurie, "How to Shine in a Sullied Industry," Fortune, February 24, 1992.

Lee, Shelley A., "Credit Equifax: Restructuring Pays," Business Atlanta, October 1992, pp. 12224.

Lovel, Jim, "Equifax Buys Database Marketing Specialist," Adweek, August 29, 2005.

Maloney, Peter, "Credit Bureaus: An Oligopoly Raking in the Dollars," United States Banker, October 1989.

McNaughton, David, "Equifax Shifting Focus Away from Health Care," Atlanta Journal and Constitution, October 25, 1996.

Novak, Janet, "Lender's Best Friend," Forbes, December 18, 1995, p. 198.

Roberts, J. S., The Spirit of Retail Credit Company, Atlanta: Retail Credit Company, 1965.

Saporta, Maria, "Former Equifax Leaders Give Thumbs Up to New CEO," Atlanta Journal, May 18, 2006.

Schwartz, Evan I., "Equifax' Exit May Not Tame the Consumer Backlash," Business Week, August 26, 1991.

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Equifax Inc.

Equifax Inc.

1600 Peachtree Street, NW
Atlanta, Georgia 30309
U.S.A.
(404) 885-8000
Fax: (404) 888-5452
Web site: http://www.equifax.com

Public Company
Incorporated
: 1913 as Retail Credit Company, Inc.
Employees : 14,000
Sales : $1.62 billion (1998)
Stock Exchanges : New York
Ticker Symbol : EFX
NAIC : 56145 Credit Bureaus; 514199 All Other Information Services; 52421 Insurance Agents & Brokerages; 56144 Collection Agencies; 54186 Direct Mail Advertising; 54191 Marketing Research & Public Opinion Polling

Equifax Inc. is the largest consumer credit bureau in the United States, providing information about consumers to clients in several industries, including insurance, finance, credit card, banking, retail, and telecommunications. In addition to consumer and commercial credit information services, Equifax has a diversified array of operations including payment services, software, modeling, analytics, consulting, and direct-to-consumer services. The company handles or facilitates more than ten million electronic transactions per day for 300,000 customers worldwide. Boasting operations in 18 countries and sales in more than 45, Equifax holds leading positions in consumer and commercial credit information in Canada, Argentina, Brazil, Chile, El Salvador, Peru, Portugal, Spain, and the United Kingdom. Equifax also holds the number one position in check guarantee and verification in the United States, Canada, France, Ireland, the United Kingdom, Australia, and New Zealand.

Late 19th-Century Beginnings

Equifax was founded in 1898 by two brothers, Cator and Guy Woolford. Cator Woolford got his start in the credit bureau business as a grocer in Chattanooga, Tennessee. There he supervised the compilation of a list of customers, with indications of their creditworthiness, for the local Retail Grocers Association. To cover the costs of this effort, Woolford sold copies of the book to other merchants. Pleased with the success of his first listing, Woolford set out to make credit reporting his career.

With his brother Guy, a lawyer six years his junior, Cator settled on Atlanta as the site of his new venture. After several visits to the city, the Woolfords rented an office consisting of a single room on the fifth floor of the Gould Building, at 10 Decatur Street, and had the words Retail Credit Company printed on the door in large black letters. On March 22, 1899, the company opened for business.

Relying on his experience in Tennessee, Cator began by seeking out an alliance with the citys grocers. Using the ledger books of Atlantas food retailers, the Woolfords copied out credit information on their customers on individual slips on paper, then arranged them into a book. After a month the task had grown so large that two additional men were hired to assist the Woolfords, and one week later a woman was employed as well. In June the pages of the book were run out on a mimeograph machine and bound between hard covers with the title Merchants Guide.

Merchants paid $25 a year to use the book and subsequent credit reports; grocers paid less. Although the company sold seven subscriptions rapidly after one of Atlantas largest department stores bought the first, by the end of Retail Credits first year only 37 merchants and 47 grocers had signed on board. The company posted a loss of $2,242.

In the following year, however, the number of customers increased and the company also branched out to other small, fast-growing commercial centers in Georgia. Credit books for Athens, Rome, Columbus, Macon, and Augusta were developed and marketed and a branch office was opened in Augusta. By the end of the companys second year, the staff had expanded to eight and the volume of sales was growing steadily.

Expanded into Insurance-Related Business in 1901

In June 1901 Retail Credit branched out into another industry, as it began providing so-called moral hazard information on potential policyholders to the Equitable Life Assurance Society. Insurance companies paid much more highly for the information they needed; Retail Credit quickly expanded operations into this lucrative area. In the fall of 1901, the company dispatched a salesman to the Northeast to drum up business in the home offices of the nations largest insurance companies. Armed with a form showing the information that would be provided about each potential customer, the salesman pulled in a large number of new clients.

As a result of its growing insurance business, Guy Woolford opened a second company office in Dallas, Texas, in March 1902. Woolford relied on a large number of correspondents, primarily lawyers and merchants in small towns across the Southeast, to fill out reports on people trying to get insurance. The following year the company also opened a branch office in Cincinnati.

In April 1903 Retail Credit closed its Augusta office, after clearly noting signs that the branch would not become profitable. The same year, the company split operations between its two main clients, handling retail and insurance reports separately. Different inspectors carried out the two types of investigations. The companys retail credit reporting activities were restricted to the Atlanta area, while insurance activities were delegated a wider scope.

In 1904 a fourth office was opened in Kansas City, Missouri. Soon offices in Chicago and San Francisco came on line. Two years later the San Francisco office was entirely destroyed by earthquake and fire. Despite this setback, geographical expansion continued and New York premises were opened in 1907. Attempts to run facilities in Baltimore, Greensborough, and Philadelphia during this time failed, and the offices were closed.

Retail Credit set a pattern of aggressive development in the life insurance-related business that would later be applied when entering other fields. For instance, in 1908 the company began issuing reports for automobile liability insurers. With only seven branch offices in operation, Retail Credit proclaimed that it provided a National Inspection Service, providing reliable reports of uniform quality for insurance purposes.

By 1913 Retail Credit had developed a special form for automobile insurance, to be completed by the investigator. The company started providing information to accident insurers and soliciting work related to fire insurance. With the companys sales running at $350,000, the Woolfords decided to incorporate. The enterprise was newly christened the Retail Credit Company, Inc., on December 29, 1913.

By 1915 Retail Credits earliest work compiling lists of good and bad credit risks in the Atlanta area had dwindled to almost nothing. While this type of operation was inherently local, Retail Credit had become interested in activities that could be pursued on a broader scale. Towards this end, the company opened five new insurance-related offices in that year.

By the end of the companys second decade of existence, Retail Credit was thoroughly established as a significant partner in the life insurance business. The credit bureau had opened 34 branch offices in the United States and three in Canada, as well. In 1920, however, Retail Credits insurance business suffered a serious blow when a consortium of insurance companies formed the American Service Bureau to provide members with investigative reports of the sort that Retail Credit supplied. Similarly an agency that had previously limited its activities to claims inspection also joined the fray. The increased competition resulted in a serious slump in Retail Credits life insurance and credit reporting activities in 1921.

Retail Credit attempted to make up the slack by increasing automobile insurance reporting; by the following year, more than one-fifth of the agencys business was contributed by this division. The company also developed its first form containing questions relating to fire insurance. In the ensuing years, the volume of requests for this new service increased dramatically.

In 1923 Retail Credit spun off local consumer credit rating operations and formed a new corporation, Credit Service Exchange. These activities had long taken place at a different location under separate management; three years later, Retail Credit further severed its connection when the Exchange was sold to businessman L.S. Gilbert. By the end of the decade, however, Retail Credit had opted to reenter the consumer credit reporting business. In the early 1930s Retail Credit, having 81 branch offices at its disposal, began studying cost-effective means of getting back into the commercial credit report business. Gathering information by telephone, as well as simplifying forms for recording information, were two of the steps taken towards this end. Also proving helpful was the advent of credit bureau associations which had begun springing up as the exchange of information between fellow creditors became more common. In March 1930 Retail Credit established the Georgia Credit Exchange to provide services in cities across the state. In 1934 Retail Credit purchased a Brooklyn credit agency, Retailers Commercial Agency, Inc.

Company Perspectives

We dont create world commerce. We make it happen. And it happens two billion times a day. From an information kiosk in Chile to a bank in Nova Scotia. Yet, we are the part of the transaction you dont see. Bridging the gap between impulse and action. Connecting the buyer to seller in the blink of an eye. We are the technology that makes commerce easier. For merchants, banks, and credit unions. And for us all. We are the knowledge that drives commerce forward. Expanding further into emerging economies. Drilling deeper into databases. Discovering infinite new markets and opportunities. We are the power that changes the shape of global commerce. Adding speed, efficiency, and convenience to how the world does business. And introducing new possibilities in how people live their lives.

Retail Credit moved to professionalize operations in the 1930s, relying less and less on part-time correspondents for information and more often utilizing full-time, company-trained inspectors. By 1937 nearly three quarters of all the companys inspection forms were being filled out by full-time investigators, operating out of 96 Retail Credit offices in cities across North America.

The U.S. entry into World War II had a serious impact on Retail Credits business. In 1941, when the war began for the United States, the company was providing 7.5 million reports a year; many of its inspectors, however, were drafted into the military and other employees left the enterprise to engage in war-related endeavors. In the first full year of U.S. military involvement, the company lost 1,200 workers. Pushed to the limit, Retail Credit finally allowed women to work as inspectors, in most cases permitting wives to take over their absent husbands jobs. By 1944 the volume of reports produced had sunk to six million.

Significant Postwar Growth

With the robust recovery of the U.S. economy in the postwar years, however, Retail Credits business revived and grew. The company continued expansion by opening new branch offices throughout the decades following the war. In 1950, 140 locations were providing services. The number grew to 258 over the next ten years.

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 sold stock to the public for the first time in 1965. During this time, Retail Credit also took its first steps toward automation, converting files written on 3x5 index cards to electronic data systems. Eventually the companys ability to retrieve information by computer from vast data banks would prove one of Retail Credits greatest assets.

In the early 1970s, Retail Credit purchased several competitors, buying credit bureaus in Oregon, Idaho, and California, and Credit Bureau, Inc., located in Washington, D.C. These purchases were subsequently challenged by the Federal Trade Commission (FTC), which claimed that they reduced competition. After a decade-long court battle, Retail Credit was allowed to retain the purchases.

Retail Credits activities in the consumer credit business were regulated for the first time in 1971, when Congress passed the Fair Credit Reporting Act, effective in April. Under this law, consumers were given the right to gain access to their credit files and correct errors in them. The law also restricted the kinds of information credit bureaus could sell.

Three years later, Retail Credit ran afoul of the new federal regulations and was charged with violating the Fair Credit Reporting Act and the Federal Trade Commission Act. Among other directives given, the U.S. government ordered Retail Credit to stop rating employees by how much negative information they collected on consumers and to stop having investigators misrepresent themselves when conducting inquiries.

Began Diversifying in 1979

Retail Credit changed its name in 1979 to Equifax Inc., derived from equitable factual information. The change symbolized the companys growing capabilities and prepared the way for further diversification of its activities, from operations centered in the insurance industry to wider marketing functions. In 1979 the company took a big step in that direction, acquiring Elrick & Lavidge, a Chicago firm that performed marketing surveys, and merging it into the companys Marketing Information Services subsidiary.

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, as Equifax and its two largest competitors, TRW Inc. and the Trans Union Corporation, divided up the nations smaller credit bureaus amongst themselves. In a ten-year period, 104 smaller credit bureaus had been added to the Equifax network alone. By 1986 the companys files covered 150 million people in 28 states. In the following year, the companys capacity grew 40 percent, to cover all 50 states.

During this time, Equifax also continued to spend heavily on technological developments for the purpose of keeping data-processing equipment up to date and offering new products to customers with the equipment. Equifax moved into marketing databases, which allowed patrons to target their most likely customers. In April 1988 the company established a marketing services division, whose first project was to develop a direct-mail program to sell home mortgages for a Midwestern insurance company. The company planned to handle all phases of the operation, including selection of potential customers, production of mailing brochures, handling of telephone inquiries, verification of credit applications, and property appraisal. The marketing division had sales of $90 million in the first nine months in operation. Between 1983 and 1988, the companys overall revenues increased by nearly 60 percent, to $743 million, and earnings more than doubled.

In May 1989 Equifax formed a strategic alliance with the fifth largest credit bureau, CSC Credit Services, a division of the Computer Sciences Corporation; the yield was 65 additional bureaus, bringing Equifaxs total number of bureaus to more than 300. The companys operations had already been divided into four divisions: insurance information services, its traditional strength; credit services; marketing services, the newest division; and Canadian operations, which were consolidated into one company, Equifax Canada Inc., in June 1989.

Moved into Europe in the Early 1990s

Equifax also divested itself of two unprofitable units in 1989, Equifax Insurance Systems and Enercon, Inc. As the 1990s arrived, the company strove to enter the European market. Equifax formed Wescot Decision Systems as a joint venture with marketer Next PLC in the United Kingdom. Late in 1991, the company bought out its British partner to form Equifax Europe.

In addition to formation of a technology division, brought about by the consolidation of the companys activities in that field, Equifax also acquired Telecredit, Inc., a Los Angeles credit bureau that provided check and credit card authorization services, for $457 million in 1990. The companys purchase of Telecredit was complicated by a sizable drop in the value of Equifax stock during 1990, as investors grew concerned about the stability of the companys profits in an economic downturn.

Another concern was growing consumer dissatisfaction. In 1989 Equifax had commissioned a poll that showed that 71 percent of all Americans thought they had lost control over information concerning their lives and 79 percent considered privacy a basic right. Equifax was forced to confront growing consumer hostility in the early 1990s, as watchdog groups contended that credit bureaus files were often inaccurate and were used in inappropriate ways. As an Equifax executive explained in Business Week, People see the use of this information as a privacy problem if it goes beyond credit purposes. To make amends, Equifax announced in August 1991 that it would cease using credit information to compile lists for the purposes of direct marketing. The company would also no longer keep tabs on customers buying histories for the purpose of placing shoppers in a range of categories from luxury buyers to coupon clippers. Four months later, the company spent $9 million to open an elaborate consumer services center which provided information to callers about their credit file in eight languages.

Leaving the direct-marketing business enhanced Equifaxs public image without too much sacrifice; the relinquished activities provided only $12 million, or one percent of Equifaxs revenues. In addition, the company modified the processes for correcting mistakes in its files, making it easier for consumers to set the record straight. In 1991 Equifax also abandoned a planned joint database project with Lotus Development Corporation that would have made available to small businesses a wide array of demographic information at microneighborhood levels; a consumer outcry and negative media attention led to the projects demise. In mid-1992 Equifax agreed to provide consumers with a toll-free number and to begin investigating disputes within 30 days. By taking these steps to mollify the public, Equifax hoped to ward off federal legislation that would mandate costly measures to increase fairness. In addition, the company hoped to avoid the expensive class action suits over its activities that competitors had suffered.

Equifaxs image-polishing moves came just as the companys net income had declined from $64 million in 1990 to $5 million in 1991; the general recession had held down demand for credit and credit reports, plus a restructuring that cut about 1,900 jobs resulted in a $19 million charge. Despite Equifaxs flat earnings, the company moved past its main competitor, TRW, to seize the lead in market share among credit bureaus in the beginning of 1992. (TRWs credit bureau was spun off as Experian Inc. in 1996.)

Having already moved into check verification and credit card processing in the early 1990s, Equifax diversified again in 1992 through the acquisition of Health Economics Corporation, which moved the company into the field of healthcare information. By 1994 Equifax had acquired three more healthcare information firms, giving it a substantial presence in claims processing. With the 1993 acquisition of Integratec Inc., Equifax gained a leading provider of debt collection and other back-office services for credit card issuers and other lenders. In 1994 the company also greatly expanded its international operations through acquisitions and joint ventures, gaining a presence in 12 countries, including Argentina, Chile, Spain, the United Kingdom, and Australia. That year also saw Equifax introduce a record 25 new products. This heightened activity was fueled by the 1993 decision to subcontract the running of Equifaxs computer operation to IBM, a move that freed Equifaxs large technical staff to develop new ways of packaging the companys data in consultation with its customers.

Exited Healthcare and Insurance, Expanded Internationally, in Mid-to-Late 1990s

In an effort to focus on payment services, credit reporting, and risk management services, Equifax sold its healthcare information business in 1996, just four years after entering the field; then in the following year Equifax spun off its insurance information services group, which had been a part of the company for nearly as long as credit reporting had been. In August 1997 Equifax completed the spinoff of the new publicly traded ChoicePoint Inc.

During this same period, Equifax aggressively expanded overseas. In July 1995 Equifax acquired U.K.-based Infocheck Group Limited and TecniCob S.A., a French payment services firm. In June 1996 the company gained full ownership of Transax plc, the largest check guarantee company in the United Kingdom, while in March 1998 it acquired a leading U.K. risk and credit management firm, CCI Group Plc. In Canada, Equifax purchased Collective Credit Bureaus Ltd. and Creditei of Canada Limited, a credit reporting agency. With opportunities for expansion growing more limited in the developed world, Equifax turned to the Latin American and Asian markets, acquiring full or partial ownership of firms in Chile, India, Argentina, Peru, and El Salvador. During the second half of 1998 Equifax purchased an 80 percent stake in Segurança ao Crédito e Informações, the leading financial information company in Brazil; a 59 percent controlling stake in Unnisa-Soluções em Meios de Pagamento Ltda., Brazils leading credit card processing firm; and a 34 percent interest in Proceda Tecnologia e Informática S.A., the second largest outsourcer of information technology in Brazil. Equifax had quickly built up a significant presence in the emerging Brazilian market through a total investment of more than $350 million.

As a new century dawned and the company entered its second century in business, Equifax was busy gaining a toehold in the burgeoning world of Internet commerce. Revenues had reached a record $1.62 billion by 1998, but the outlook was somewhat clouded by the economic uncertainties that had begun with the Asian financial crisis of 1997. Equifaxs push into the Brazilian market was challenged by the economic difficulties there, especially the currency devaluation. As one of the key players in the increasingly electronic world of commerce, however, Equifax was likely to survive the thrive.

Principal Subsidiaries

Info Inc.; Acrofax Inc. (Canada); CBI Ventures, Inc.; Computer Ventures, Inc.; Credence, Inc.; Credit Northwest Corporation; Credit Union Card Services, Inc.; Equifax Asia Pacific Holdings, Inc.; Equifax Card Services (Madison), Inc.; Equifax Check Services, Inc.; Equifax Card Services, Inc.; Equifax Credit Information Services, Inc.; The Equifax Database Company Ltd. (Ireland); Equifax Decision Systems B.V. (Netherlands); Equifax de Mexico Sociedad de Información Creditica, S.A.; Equifax Europe Ltd.; Equifax Europe (U.K.) Ltd.; Equifax Healthcare Information Services, Inc.; Equifax Holdings (Mexico) Inc.; Equifax India Private Ltd.; Equifax Information Technology, Inc.; Equifax Investments (Mexico) Inc.; Equifax Investments (U.S.) Inc.; Equifax Luxembourg S.A.; Equifax Luxembourg (No. 2) S.A.; Equifax Mauritius Private Limited; Equifax Payment Services, Inc.; Equifax Properties, Inc.; Equifax-Rochester, Inc.; Equifax South America, Inc.; Equifax U.K. Finance Ltd.; Equifax U.K. Finance (No. 2); Equifax Ventures, Inc.; Financial Institution Benefit Association, Inc.; Financial Insurance Marketing Group, Inc.; First Bankcard Systems, Inc.; Global Scan Ltd. (U.K.); Global Scan (USA), Inc.; Goldleaf Technologies, Inc.; High Integrity Systems, Inc.; The Infocheck Group Ltd. (U.K.); Infolink Ltd. (U.K.); Light Signatures, Inc.; Market Knowledge, Incorporated; Stewardship, Inc.; Tecnicob S.A. (France); Transax Australia plc (U.K.); Transax France plc (U.K.); Transax (Ireland) plc; Transax Ltd. (New Zealand); Transax plc. (U.K.); Transax pty Ltd. (Australia); Transax S.N.C. (France); UAPT-Infolink, plc (U.K.).

Principal Operating Units

North American Information Services; Payment Services; Equifax Europe; Equifax Latin America; Knowledge Engineering.

Further Reading

Building Credit Globally, Institutional Investor, April 1996, pp. 2728.

Deogun, Nikhil, Equifax Unveils Plan to Spin Off Insurance Line, Wall Street Journal, December 10, 1996, p. B4.

Fickensher, Lisa, Credit Bureaus Reinvent Themselves for Kinder, Gentler, and Wider Role, American Banker, December 29, 1997, pp. 1 +.

_____, Equifax Reshapes Itself to Leverage Its Strengths, American Banker, January 5, 1998, pp. 11 +.

Frank, Robert, Equifax Broadens Its Markets and Boosts Its Bottom Line: Credit-Reporting Firm Enters New Businesses and Spreads Its Global Wings, Wall Street Journal, September 22, 1994, p. B4.

Jakubovics, Jerry, Jeff White Helps Equifax Fly High, Management Review, 1988.

Konrad, Walecia, Credit Reports with a Smile, Business Week, October 21, 1991.

Kraus, James R., Brazilian Deal Just a Step in Equifaxs Push Abroad, American Banker, August 27, 1998, p. 5.

Kretchmar, Laurie, How to Shine in a Sullied Industry, Fortune, February 24, 1992.

Lee, Shelley A., Credit Equifax: Restructuring Pays, Business Atlanta, October 1992, pp. 122-24.

Maloney, Peter, Credit Bureaus: An Oligopoly Raking in the Dollars, United States Banker, October 1989.

McNaughton, David, Equifax Shifting Focus Away from Health Care, Atlanta Journal and Constitution, October 25, 1996.

Novak, Janet, Lenders Best Friend, Forbes, December 18,1995, pp. 198 +.

Roberts, J.S., The Spirit of Retail Credit Company, Atlanta: Retail Credit Company, 1965.

Schwartz, Evan I., Equifaxs Exit May Not Tame the Consumer Backlash, Business Week, August 26, 1991.

Elizabeth Rourke

updated by David E. Salamie

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