Credit has been around for an estimated 5,000 years and it lies at the heart of human activity. Debt is one of the oldest means of trade, maybe even older than currency according to a new theory from David Graeber, author of Debt: The First 5000 Years.
It’s one of the foundations on which human societies have developed, and it helped define human and institutional relationships deep in the past. How did credit come to exist the way it does today, with credit cards, loans of all kinds, mortgages, and more? Take a look at this quick history of debt and credit to find out.
3500 BC to 50 BC — The first consumer credit loan was probably made in Sumer, an ancient city in Mesopotamia, while the Babylonians may have been the first to write laws around credit in 1800 BC, including maximum interest rates.
Credit and debt were widespread through antiquity and the classical era of the Roman Empire, with written records of wealthy landowners buying more land on credit, in lieu of carting wagonloads of silver through the streets.
800 to 1500 AD – In the Middle Ages, economic activity that had centered on Rome collapsed and religious figures were skeptical of credit. The church banned credit, what they called “usury,” and it may have seriously hindered development in the period. By 1545, though, England had a legal interest rate, and lending had become an integral part of economic development, especially with the discovery of the New World around the corner.
1800s – In the 1800s, credit reporting was invented to find out a borrower’s credit-worthiness. Newsletters about people who failed to pay their debts were circulated until the modern credit report was invented by the Retail Credit Company in 1899, now Equifax.
1900s to Today – The automobile revolution makes borrowing a widespread phenomenon in the first part of the century, with automakers lending money to consumers. Later, the postwar housing boom made mortgages synonymous with the middle class. By the 1950s, retailers would set up individual credit accounts with individuals, while credit cards like Visa and American Express were popularized throughout the 1960s. Today, almost everyone has a credit card and many use them not to borrow money, but just for the convenience of paying without cash. Paying the full balance on your card is one of the smartest ways to use credit cards and improve your credit rating; for more tips or help eliminating your credit card debt, find a David Sklar office near you and ask about Consumer Proposals and credit counselling.
Debt doesn’t have to be bad; when you use it wisely, it can build your assets and put you in a healthier financial position. But if debt becomes too much for you to keep up with, at David Sklar & Associates, we can help you get out of debt and rebuild your credit rating. In addition to personal bankruptcy services, we also offer Consumer Proposal services, a way of renegotiating your debt with your unsecured creditors (like credit card companies). You can check out our Consumer Proposal FAQs for more information about how you can reduce your debt. For thousands of years, credit has been helping people achieve financial goals. It doesn’t have to be a burden and with our help at David Sklar & Associates, you can overcome your debt burden. Call us today.