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TransUnion (full name Trans Union LLC) is a consumer credit reporting agency, considered one of the 'big three' agencies in the United States. Like their main competitors, Experian and Equifax, they now market their credit reports directly to consumers, in addition to their core business of providing the reports to potential creditors.

TransUnion was created in 1968 by Union Car Company as their holding company. Its credit business began with the purchase of Credit Bureau of Cook County (CBCC) in 1969. Today it operates 250 offices across the U.S. and in 24 countries worldwide. It is based in Chicago, Illinois.

TransUnion was a subsidiary of The Marmon Group until January 2005. It is now an independent, privately held company.

Early history: the first decade, 1968 to 1979

In 1968, the Union Tank Car Company (UTC) a Fortune 500 company, made a decision to enter the automated credit reporting industry because of its emerging "infant technology" status and the low purchase price of credit bureaus in major US cities. This price anomaly was brought about by the appearance of automated credit reporting competitors like aerospace-minded TRW (later to merge with the Chilton credit operation in Dallas and now called Experian); the nascent operations in Houston (sponsored in part by the Association of Credit Bureaus (ACB)); and traditional credit bureaus in Oregon managed by CBI West, Inc., a subsidiary of Retail Credit, Inc. (later to be called Equifax), which produced the atmosphere of radical change in the industry and a great deal of concern about the future of the traditional paper-based industry—with good reason.

Union Tank Car had a target of opportunity to buy the Credit Bureau of Cook County (CBCC), owned and operated as a customer-owned cooperative, similar to most US Credit Bureaus. At the time, CBCC was installing a system provided by the ACB, who had developed this system at the Credit Bureau in Houston to provide a route to automation to save the local customer-owned credit bureau industry and was being installed in several cities under ACB license.

UTC brought two executives from Massachusetts: Bill Devers, formerly at Honeywell's computer marketing operation, and Arthur Lemay, formerly the technical director at Keydata, a pioneering on-line services company which was the first company in the world to use time-sharing technology for business services.

UTC (renamed Trans Union Corporation) was a large company with substantial assets capable of acquiring and automating many of the credit bureaus available for sale in the US. This was a salient into the information technology business by a traditional manufacturing and financial services firm. The present Trans Union is an example of successful entrepreneurial activity undertaken by a large company to diversify into new industries with no prior knowledge of a new business. Business schools call this the "intraprenurial" model, but there are very few examples of success of this model in the real world. Trans Union is always described as a successful implementation of diversification made possible by using the technical skills of the acquiring company. But this is not true. There was no contribution of technical skills or know-how whatsoever—it was all provided by recruitment of new employees.

Trans Union today is a company made possible by the talents assembled by Jerome Van Gorkom, the former chairman of UTC, using lots and lots of capital, a correct and steadfast vision, very long range financial and technical planning, suspension of normal financial control procedures for nurturing a new venture, and good timing in entering the market.

Why CRONUS was developed

UTC bought CBCC in 1968, and work commenced immediately. The company quickly reassessed the financial model used by CBCC in justifying the ACB system and discovered that the system could never achieve profitability because of its limited technical conception and extremely high operating costs: both for computer services and for labor-intensive operations. Financial analysis revealed that only two models were viable: 1) A true national network with a very large computer resources located in the center of the US, and 2) A network of very small computers serving local markets, but managed centrally. Two preliminary designs were done, and Trans Union chose to use the first model.

In early 1969, UTC scrapped the entire computer operation at CBCC, and developed a brand new system aimed at the national computer center model. This was called the Credit Reporting On-Line Network Utility System (CRONUS). CRONUS went on-line in late 1970, and initially served only the credit bureau in Chicago. The CRONUS system was developed by assembling a brand-new set of employees with on-line experience in computer time sharing and from Chicago-based universities, retail, and electric power and telephone utility companies.

The first on-line implementation was done with an IBM 360 model 50 computer installed at the Credit Bureau of Cook County in 1969. This mainframe computer could drive 160 on-line IBM 2260 display tubes.

In 1969, Trans Union Systems also brought aboard Stanley Mularz, an experienced credit executive, to run the Chicago bureau and to manage the business aspects of providing credit bureau operations as well as knowledge and understanding of the industry to give the technical staff his credit-granting expertise to construct a technically optimal solution with high relevance to the business needs of its customers.

Later in this time frame, Trans Union Systems consulted informally with the United Credit Bureau of Puerto Rico (UCBPR) to implement a version of the small computer networked model for credit reporting, which operated on Digital Equipment (DEC) Mini-Computers, and served the island for some time before the bureau was sold to Trans Union Systems, which converted the UCBPR-developed Spanish name lookup system to CRONUS. UCB is now on-line with CRONUS.

Names of the companies

This operation was a subsidiary of Trans Union Corporation and was named Trans Union Systems, Inc., and comprised the technical operations for CRONUS, the owned bureaus (all under a holding company called Trans Union Credit Information Corporation(TUCIC)), and all of the corporate Information Technology functions of the parent company.

Business realities steering technology

Trans Union Systems used a "Manhattan Project"-style operation to do manual conversions of the paper records with contract employees in Shannon, Ireland in the free port zone using key punch equipment, in the Barbados with key to disk equipment, on an Indian reservation in Arizona also using key to disk equipment, and in an on-line center in St. Louis, connected over telecommunications facilities. This center used the non-graphical 480 by 240 character IBM 2260 terminal. Its objective was to achieve the most accurate transcription of paper to automated records in the most cost-effective way. There were 1,800 people working on these conversions simultaneously, and the Indian reservation proved to be the most cost-effective.

Then Trans Union saw the early efforts of its competitors in collecting accounts receivables data by establishing a credit bureau reporting tape format. This required each company to write, test, and operate a special reporting system for updating on-line credit files. In addition, the company saw early attempts to deliver credit reports over teletype terminals using computer codes not familiar to the users, and requiring manual intervention for virtually every report. Trans Union did two things:

Firstly, Trans Union Systems made agreements with major credit grantors all over the US to accept raw copies of accounts receivables tapes with a translating engine system requiring virtually no effort on their part to provide special reporting. This translator made it possible to gain access to many tapes otherwise unavailable, and did not require programming because it used a high-level Trans Union-developed data conversion language. This volume tape input system permitted Trans Union Systems to avoid the labor-intensive function of trade checking used in manual systems which used paper documents sent out to merchants and processed by hand to update the reports in the old paper systems, and were also needed in cases when the numbers of tape-updated accounts were insufficient.

Secondly, the teletype system had great promise, but instead of expecting credit grantors to learn new tricks and to man slow terminals, Trans Union developed new algorithms which did not require human decision-making, and worked with the ACB to develop a standard format to print credit reports which were virtually identical to the more expensive written reports at a price like the simpler telephone report. So, in one step, the credit grantor's employees could prepare a batch input tape, connect once to the computer to retrieve batches of easily understood reports which could use them for loan documentation replacing handwritten notes written in conversations with credit reporters, and they were able to free up many hours of time on telephone calls, since the machines could run unattended for many hours at a time.

The network phase

The Chicago operation went on-line in 1971, and shortly thereafter (1972), the owned bureaus in St. Louis, New York City, Philadelphia, and (under a service agreement) Toledo all went on-line.

In 1972, Trans Union Systems became MCI Telecommunication's first customer in implementing Trans Union Systems' Network technology with tariffs unique to that company's services. Initially, St. Louis went on-line followed by Philadelphia and other cities. This was a subject for much controversy at the time since no one else in the industry had used its volume buying advantage to negotiate special tariffs as is commonly done (quite legally) for the press for news tickers, security services companies, airlines, and many others. Trans Union also negotiated similar agreements for large volume call distribution equipment which optimized manual telephone systems before equipment of this type became common in Private Branch Exchanges(PBX).

In 1973 Trans Union Systems modernized this system with a network of satellite computers located in each Credit Bureau which provided operators with displays, local users with slow teletype printers, and local high speed line printers with network services. The network of mainframe to credit office computers was centrally managed in a single to multi-point network with alternate routing paths. Trans Union developed its own communications and network protocols to make this possible which required substantial R&D expense, but permitted much more economical and reliable network operations. The network was managed centrally and did not require programmers to make changes to the mainframe software and suffer outages and interruptions which were formerly the case. All this equipment was procured from airline industry suppliers who had the expertise to handle the custom engineering and installations of this major system. This reduced networking costs by 80% and made Trans Union Systems' operating costs dramatically lower than other industry competitors. This was made possible by the elimination of separate phone circuits for each of these functions, and because higher speed modems were being introduced but could not otherwise be provisioned in the network. This permitted economical low-cost deployment for thousands of low-speed devices in credit grantors' offices, and a more robust and flexible operation.

Technical descriptions

In the early 1970s Trans Union Systems used IBM mainframes with the MVS operating system and a specialized multi-thread operating system adjunct to provide on-line concurrent operation (not common then), and a number of removable hard disks and magnetic strip data storage units called "Data Cells." These units each held only 10 cells of 40 million bytes each, and each took about 40 square feet of space. The first mainframe used had only 512 kilobytes of memory, and the "Data Cells" were so slow that Trans Union Systems developed its own software to be able to use this difficult and error-prone device. A random seek took about 3/4 of a second. 80% of all computer cycles were spent updating the files from the dual sources of manual updates, inquiries, and maintenance which were indicated as new information on the reports, but not posted to the actual records. The second source was the accounts receivables update stream. These two sources were broken into 24 cycles monthly and were run concurrently with the on-line operations. This strategy was needed because the CRONUS system was designed to be able to restore damaged sections of the data base "on the fly" while not interrupting the on-line system. Since it was impractical to back up and restore such large files on a timely basis, this scheme permitted data cell restorals from tape and made possible read-only operations on-line with data-cells in a two-level store concept. This device was permanently withdrawn by IBM in 1975 and there were never any newer generations.

In addition CRONUS was designed to run "on-the-pin." (Some computers in this day had a meter showing the % utilization of the processor, and when it was 100% the meter rested on a pin. The 360/50 did not have such a meter.) Running on-the-pin means that the computational load always exceeded all other loads by design. Trans Union did this because the encoding and decoding of the data compressed into formatted a record into a data envelope is very computationally intensive. This is because each record may have a different organization depending on what kind of data is contained, and how many repetitions there are in each data set. So, since each record contains a meta-description of the data, the processing is anything but straightforward. Trans Union staff always tried to keep CRONUS able to run on-the-pin by adding as much channel and Input/Output facilities to ensure that there would not be other bottlenecks. At the time, data storage and channels and Input/Output costs were the dominant cost determinators, and as technology changed many attempts were made to change this trade-off to a less onerous system. But, at the time, Trans Union found that the ability to run on-the-pin had the serendipitous result that when a newer processor was installed, having, for example, 200% more power, everything ran 200% faster too. This is not usually the case in commercial applications when non-computational bottlenecks exist. However, when they actually ran on-the-pin, they knew it was time to upgrade the processors. In addition, this scheme permitted the use of multiple batch update mainframes who could be running concurrent updates to different cycles—and when the maintenance cycle finished Trans Union could "hot-switch" the logically updated cycle on line without shutting down the on-line system.

But, even after all the data cells were retired, the two-level store was maintained because Trans Union thought the same fundamental factors of cheaper and slower memories would coexist with faster and more expensive memories and Trans Union would just jump up to new technologies at higher level of processing volumes with the newer generations of two-level stores suitable for very large databases with low levels of volatility.

Diversification

By 1979 Trans Union Systems had acquired Medical Computer Systems, Inc., in Dallas and World Computers in Michigan to build businesses in clinic processing and the Credit Union processing business. These were never integrated into the Credit operation.

1980 onward

Trans Union was built from acquisitions of major city credit bureaus, with service agreements with local owners of bureaus which were not for sale, by using the technology and skills inherent in the CRONUS system to deliver an economic service to credit grantors in a complex competitive environment. In addition, Trans Union acquired and converted a major West Coast automated Credit Bureau to become a national company.

Subsequently, of course, Trans Union Systems acquired more credit bureaus and modernized every aspect of the technical operation in tune with more modern technology, and added many other credit-related services.

When Trans Union (the Fortune 500 parent company) was purchased by the Marmon Group in Chicago in 1981, the credit operations were renamed "Trans Union", and the other operating entities of the parent reverted to their historical names, like Union Tank Car Company specializing in leasing rail car equipment for agricultural and chemical industries, and the other information technology businesses of Trans Union Systems.



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