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239 Years of Good Credit in the USA

239 Years of Good Credit in the USA


GoodCredit.com might not have been here on July 4, 1776, but good credit sure was.  We thought for Independence Day we would share some tidbits about credit in America through the years.

Although mortgages were made even in colonial times by “land banks,” it was not until after the American Revolutionary War when they became more commonplace.  In 1781, several prominent Philadelphia merchants founded The Bank of North America as the country’s first commercial bank.  With the formation of additional commercial banks, exchange of bank notes and some government involvement, mortgage risk was thus lessened for lenders which fueled growth in the mortgage market.

Prior to the advent of credit cards, a consumer would often run a tab with a local retailer on an account.  The purchaser would buy goods, the merchant would keep a record of the purchase in a ledger, and then the purchaser would settle the account later upon receiving a paycheck or, if the purchaser was a farmer, whenever crops were harvested and sold.  The cycle would then repeat itself.  In 1921, Western Union began printing paper credit cards for its customers, followed by several other types of merchants such as oil companies.  Eventually companies began to accept each other’s cards which led to the modern day credit card, which continues to evolve in the digital age.

Credit reporting was born in the Nineteenth Century when merchants began to share with each other information about their customers’ payment histories, eventually evolving into small credit bureaus.  After the onset of the Industrial Revolution and improvements in technology, transportation and communication, these bureaus grew and began merging with each other until Experian, Equifax and Transunion emerged as the biggest three.

Consumers who don’t have good credit can always take steps to get good credit, and in the meantime be thankful that one institution from the past no longer exists:  debtors’ prisons.  These prisons were prevalent from colonial times until the middle of the Nineteenth Century.  Borrowers unable to pay their debts were incarcerated until they were able to work off not only their debts but also the costs of imprisonment.

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