Meet the gossipy, 18th-century deadbeat-hunters who accidentally created the credit ratings industry

Swindlers beware.
Swindlers beware.
Image: The British Library
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It’s a fun fact of business history that the modern credit-rating industry owes its existence, at least indirectly, to a group of 18th century British salesmen sick of being cheated by deadbeats.

By the 1700s, imports of commodities taken from Britain’s colonies had transformed London into a thriving hub of international trade. One of the greatest limiting factors to this expanded economy was information: businesses couldn’t extend credit without knowing which creditors to trust.

Merchants informally traded stories about deadbeat clients at the coffeehouses and guildhalls where they congregated. By the latter part of the century, they realized there was value in sharing this gossip more broadly, according to Rowena Olegario, a senior research fellow at the Oxford University Centre for Corporate Reputation and author of the book A Culture of Credit: Embedding Trust and Transparency in American Business.

The oldest recorded group of this nature is the fabulously named Society of Guardians for the Protection of Trade Against Swindlers and Sharpers, founded in London in 1776. (A sharper, in Georgian parlance, was a cheat.) An 1812 roster that Olegario viewed lists roughly 550 members including watchmakers, flour merchants, carpet manufacturers, and pharmacists.

The Society wrote narrative reports on individual customers that included relevant credit history and outright gossip. “As far as I know, they are the earliest ‘credit ratings’ of individuals in the Anglo-American world,” Olegario said.

Later groups left better records. The Mutual Communication Society was a group of London tailors who banded together in 1801. It was a secretive group that swore members “to communicate to the Society without delay, the Name and Description of any Person who may be unfit to trust.”