History of Credit
Credit has evolved from simple trade agreements in ancient times to the complex financial systems we have today. Understanding this evolution, from early loans and the rise of credit cards to the importance of credit scores, is crucial for making informed financial decisions.
Credit has evolved significantly over time.
It started with trust-based trades in ancient Mesopotamia and Greece, where they began recording loans and interest rates. The Renaissance introduced bills of exchange, making long-distance trade easier.
During the Industrial Revolution, credit became crucial for industries needing capital to grow, shaping modern banking. In the 20th century, installment loans became popular for buying big items like cars. Stricter banking regulations followed the Great Depression.
In the mid-1900s, credit cards like American Express and Diners Club simplified payments and introduced the idea of borrowing and repaying over time.
Today, your credit score determines if you qualify for loans and the interest rates you'll pay. You credit score represents how "trustworthy" you are.
Understanding credit is crucial when you are making important financial decisions.