History of

credit Module 3
Hasegawa, Yuna T.
Pasatiempo, Renae Louisse O.
Tolentino, Jhielyn B.
 Credit began before the 1900s
 The earliest and most common form of credit were loans
from local shopkeepers.

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The ancients and
credit
The ancients and credit
3,500 BC – Sumer 1,800 BC – Babylon

 with about 89% of its population living  The Code of Hammurabi

in cities.

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The ancients and credit
50BC – The Roman Republic

 No, it was done through credit and

paper. Cicero writes “nomina facit,
negotium conficit” – or, “he uses credit
to complete the purchase”.

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Moral concerns
about lending
Moral concerns about lending

800 – The Dark Ages in Europe 1500 – The Age of Discovery

 The Church even banned usury  As European explorers and merchants

begin trade missions to faraway lands,
the need for capital and credit
increases.

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Moral concerns about lending

1545 – England 1787 – England

 The rate was set at 10%.  Philosopher Jeremy Bentham writes a

treatise called “A Defense of Usury”,
arguing that restrictions on interest
rates harm the ability to raise capital
for innovation.

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 The birth of
modern consumer
credit
The birth of modern consumer
credit
1803 – England

 Credit reporting itself originated in 1826 – England

England in the early 19th century. The
earliest available account is that of a  The Manchester Guardian Society
group of English tailors that came
together to swap information on
customers who failed to settle their
debts.

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The birth of modern consumer
credit
1841 – New York
 The Mercantile Agency is founded,
and starts systemizing rumors about
the character and assets held by
debtors through a network of
correspondents. Massive ledgers in
New York City are made, though these
reports were heavily subjective and
biased.
1864 – New York
 R.G Dun and Company- formerly
known as The Mercantile Agency
1899 – Atlanta
 The Retail Credit Company
 The company later changes its name to
Equifax. Today, Equifax is the oldest
of the three major credit agencies in
the United States.
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The consumer
credit boom
The consumer credit boom

1908 – Detroit

 Henry Ford’s Model T makes automobiles accessible to the

“great multitude” of people, but they were still too
expensive to buy with cash for most families.

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The consumer credit boom

1919 – Detroit

 General Motors Acceptance Corporation (GMAC) is

founded and popularizes the idea of installment plan
financing. Consumers can now get a new car with just a
35% down payment at time of financing.
.

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The consumer credit boom

1930 – United States

 By this time, efficient U.S. factories are pumping out

cheaper consumer products and appliances. Following the
lead of GM, now washing machines, furniture,
refrigerators, phonographs, and radios can be bought on
installment plans.

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The first in big
data
The first in big data
1950 – United States

 By 1950, typical middle-class Americans already had revolving

credit accounts at different merchants. Maintaining several
different cards and monthly payments was inconvenient, and
created a new opportunity.

1955 – United States

 To get the latest information, agencies would scour local

newspapers for notices of arrests, promotions, marriages, and
deaths, attaching this information to individual credit files.

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The first in big data
1958 – United States

 BankAmericard (now Visa) is “dropped” in Fresno, California.

1960 – United States

 American credit bureaus issued 60 million credit reports in a single

year.
1964 – United States

 The Association of Credit Bureaus in the U.S. conducts the first

studies into the application of computer technologies to credit
reporting. Accuracy of data is also improved around this time by
standardizing credit application forms.

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The first in big data
1970 – United States

 The first Fair Credit Reporting Act

1980s – United States

 The three biggest credit bureaus attain universal

coverage across the country.

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The first in big data
1989 – United States

 The FICO score is introduced, and quickly becomes a standard system to measure credit
scores based on objective factors and data.

2006 – United States

 VantageScore is created through a joint-venture

between the top three credit scoring agencies.

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Modern credit
Modern credit
✗ The Information Age has enabled a new era in consumer credit
and assessing risk – and today, credit reports are used to inform
decisions about housing, employment, insurance, and the cost of
utilities.

✗ Learn more about how data, the internet, and modern computing
is changing credit in Part 2 of this series.

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Credit cards
Modern credit
✗ The first credit card was the Diners Club card in 1950. The card
was used for travel and entertainment and the balance had to be
paid every month.

✗ In 1951, the first bank credit card was introduced by Franklin

National Bank, based in Long Island, New York.

✗ In 1958, most credit card issuers began allowing revolving credit.

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Today, credit is everywhere.

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Thank you so much!

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