Credit debt in historical context

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The origins of today's credit culture date to the 1920s and the advent of installment lending for cars and appliances (stoves, refrigerators, radios), says economist Martha Olney, author of"Buy Now, Pay Later." Attitudes changed. In the 19th century,"it was thought that only irresponsible families bought on credit," she says."By the 1920s, it was only foolish families that didn't buy on credit and use it while they were paying for it." In the mid-1920s, 60 to 70 percent of cars were sold on one- to two-year loans.

After World War II credit became part of the mass market. In 1958 Bank of America introduced a credit card that in 1976 was renamed Visa. The combination of aggressive merchandising and government laws prohibiting racial and ethnic discrimination in lending led to a huge expansion of borrowers. One reaction to the anti-discrimination laws was the use of impersonalized, computer-driven credit scores to determine loan eligibility. Now U.S. businesses buy 10 billion FICO scores annually.

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