| Money was invented to facilitate the exchange of | | | | Credit is the lending of money against collateral. |
| goods and services. Our ancient ancestors used | | | | The collateral could be anything, ranging from |
| to barter goods they produced in exchange for | | | | jewelry to land. This was the traditional way of |
| other goods. For example, a farmer bartered | | | | lending money. In modern times banks and |
| grain for pots and other clay utensils. Problems | | | | institutions issue credit cards. These credit cards |
| arose with the unit of exchange. How many units | | | | can be used to purchase goods and services. The |
| of grain to exchange for a utensil? This led to | | | | system is based on the payment for these goods |
| bargaining. People still felt that they were cheated. | | | | at a later date along with a fee for the service. A |
| Another problem was the price of services. For | | | | person's credit limit (the amount a person can |
| example, how much do you pay for a day's | | | | spend) is decided by a variety of factors like |
| labor? More disputes. Finally somebody invented | | | | income, transactions, repayment of loans, etc. to |
| money. Money became the universal means of | | | | make the determination of credit limits easier, a |
| payment. The money or currency was minted | | | | system called credit score or rating was |
| and regulated by the King or Queen (since they | | | | developed. |
| were the government). | | | | A credit score is ranking in a system that shows |
| Money evolved through the ages going from coins | | | | the probability of a person repaying credit. It is |
| to paper and now plastic and electronic. The | | | | calculated by taking into account all you previous |
| inflation through the ages has meant that the | | | | financial transactions. A credit score is calculated |
| denominations and the strength of the currency | | | | by three corporations in the U.S. These scores |
| kept changing. As the purchasing power of the | | | | are sold to banks and lenders when demanded. A |
| money reduced, people were forced to carry | | | | bad credit score means you will find it difficult to |
| larger amounts of money. This led to the use of | | | | secure credit at favorable terms. At times like |
| paper instead of coins. Today coins are found only | | | | this it is nearly impossible to secure a credit card. |
| in the lowest denominations. Plastic money | | | | If the need for a credit card arises and you |
| evolved due to a similar need. Electronic money is | | | | cannot find one, you should look into unsecured |
| an easy and secure way to transfer large sums | | | | credit cards. Unsecured credit cards do not |
| of money. | | | | improve your credit score. |