History Of Lending

9000 BC – 3000 BC | The first foundations of interest can be traced back to this pre-currency period. With cattle often used as the money of the day, people could loan cattle from others to help them eat as well as trading produce for other essential living commodities. Due to the natural reproductive life cycles of cattle, lenders would expect to receive more cattle back than they had originally lent, setting the wheels in motion for a form of interest.

8000 BC - 1500 BC | Some of the oldest forms of literature, including the Epic Of Gilgamesh, describe temples as the birthplace of lending. Tokens featuring images of cattle, jars and grain were placed into closed clay pots to represent what the borrowers had been given. Each pot was then covered with seal impressions that are now thought to have been the first contract signatures. This stopped anyone from breaking the pots and changing what was inside which is where the phrase 'breaking a contract' comes from.

1000 BC - 500 BC  | The first state issued metal coins are produced and used in China, paving the way for a universal form of lending that doesn't require an object of need such as food, cattle or shelter. Instead, money can be borrowed and transferred across larger regions whilst being used to purchase items of value.

700 BC – 400 BC | There are plenty of references to loans in almost every single religious text, however the Old Testament's Book of Proverbs is considered to be the first of those to discuss the morality of lending. It includes references to using personal items as security for loans, and using your own assets as security for 'neighbours' in a similar way to today's guarantor loans.

500 BC – 496 AD | The ancient Greece and Roman civilisations soon caught up with the Chinese in terms of coinage and the expansion of these empires led to an explosion of different lending options. Loans were primarily reserved for those trading across the oceans with lenders financing merchant ships in return for incredibly generous financial gains. However, if the ships were sunk or failed to return, lenders would lose everything they had invested.

496 | After the fall of the Roman Empire, promissory and credit notes were issues through reputable fledgling banking channels across the empire. This was done to minimise the effect of the the disbanding Roman rule and marked the first widespread use of credit notes that could be transferred internationally.

500 – 1500 | Welcome to the Middle Ages! Throughout this landmark period in history, trade exploded as both travel routes and the ability to accurately account credit became common throughout the Western world. A huge number of trade fairs sprung up during this period to further boost international trade which led to the creation of fair letters. These letters of credit allowed merchants to purchase goods, transport and sell them, then return to pay the debt before the fair ended.

496 – 1397 | With Italy experiencing a deep economic recession, entrepreneurs sprung up in Italian marketplaces to offer loans and pawnbroking services. The benches, or bancas, that they used in the markets led to the expression of banks that we use today. Interestingly, if they felt they weren't making enough money then they would smash, or rupta, these bancas – hence the word bankruptcy.

1397 | The first in Europe, the Medici Bank, is established in Italy offering a basic centralisation of loan agreements and credit referencing. The Banca Monte dei Paschi di Siena, founded almost a century later in 1472, has been operating ever since and is the longest running bank still in existence today.

1252 | The earliest recorded indentured loan is issued in England. Indentured loans were most commonly used by incredibly poor people to source money in exchange for labour. Rather than paying back the loans like for like, services were used instead. Think about the classic adage of paying off your restaurant bill by washing pots in the kitchen! These indentured loans became commonplace throughout Europe and across the world, all the way through to 18^th century United States of America.

1485 | The start of the Tudor period in England heralded in the first records of mortgages. They were incredibly complex loan agreements that offered “the right to ownership on the condition of repayment”. It would be almost 450 years before the mortgages we know today were launched in the US and Europe.

1650 | Following the Middle Ages, the next major step was taken in Britain after a seizure of gold at the Royal Tower of London by Charles I. It was no longer considered safe to store gold with the crown and so goldsmiths began setting up provincial banks, starting with Thomas Smith in Nottingham in the 1650s. This paved the way for localised banking, including the provision of credit notes, loans and deposits.

1694 | The Bank of England is founded in an effort to raise money to rebuild its navy after a crushing defeat to the French. The first bank notes are issued to companies and individuals in exchange for bullion. You only need to look at the notes in your pocket today to see evidence of this. The words “I promise to pay the bearer on demand the sum of £x” stems from these 1694 bank notes which technically means that you're able to exchange these notes for the equivalent value in gold.

1763 | Enter the Rothschild family. Mayer Rothschild was a German Jewish banker and is considered the founding father of international finance. After trading rare and gold coins throughout his early career in Germany, he and his sons spread the family business into London, Frankfurt, Naples, Vienna and Paris. This was the first interconnected banking network which allowed for the fast and reliable transference of wealth between major European nations.

1775 | Ketley's Building Society is the first of its kind formed anywhere in the world. This Birmingham collective of shared ownership financiers brought lending and borrowing out of the sole hands of the monopoly of the Bank of England and into the hands of local people. Loans were discussed, approved and funded by each member of the society.

1775 | Across the pond, the Continental Congress of America followed the same path as the Bank of England in 1694 by authorising the printing of $2m in bank notes. The money raised would be used to fund the Revolution and the promissory notes would be exchangeable for Spanish coinage – the most circulated currency on the planet at the time.

1900 | Lending remained steady for over a century until the next centralisation occurred in the form of the first published credit agency. Moody's Manual was a nationally available document which primarily listed the creditworthiness of nations, companies, bonds and investments. It was the first of its kinda and paved the way for the likes of Experian and Equifax that are used by lenders today.

1934 | Although highly complex and haphazard mortgages have existed since the Tudor period, the rise of modern mortgages as we know them today were not actually championed by banks, but instead by insurance companies. As underhand as it sounds, the Federal Housing Administration in the USA encouraged insurance companies to lend larger amounts to help the population overcome the Great Depression. However, this did mean that many more properties were seized by insurers when repayments weren't made. Then along came World War II...

1946 | With technology and global communications now beginning to enter the fray, 1946 marked the introduction of the first ever credit card – the Charg-It Card. This American credit facility was created by Brooklyn banker, John Biggins, with credit payments forwarded directly to his bank whilst he would then obtain payment from the customer with interest added. It began as a local only service, but soon others began to follow suit.

1950 | The Diners Club Card was the first of its kind in widespread use and was simply made out of cardboard! The bill had to be paid in full at the end of each month and was mainly used for entertainment and travel. Just 18 months after launching, there were 20,000 card holders across America.

1958 | American Express launched their own credit card towards the end of the decade and were the first to launch an all plastic credit card in 1959. Five years later, there were 1 million American Express card holders globally with 85,000 merchants accepting them both at home and abroad.

1958 | VISA aim to become an all in one credit card solution. Rather than having to run several different credit accounts depending on purpose (travel, entertainment, loans etc.) card holders could use their VISA card for almost any credit purpose. 60,000 fully working credit cards were issued without even being applied for in order to force businesses to begin accepting VISA as a form of payment.

1959 | Following on from the commercial credit scoring publications at the start of the century, FICO scores are used by lenders to assess the creditworthiness of consumers on a mass scale, therefore helping lenders to make more informed decisions regarding credit applications.

1966 | The second modern giant of credit cards, MasterCard was launched in 1966 having given VISA a healthy head start. They were helped by a huge merger of multiple independent credit card companies that led MasterCard to becoming a world force on the credit card stage. Barclays Bank also become the first UK finance company to take on the VISA credit card in the same year.

1968 | The first time that the electronic transfer of funds came in 1968 thanks to BACS. This system allowed customers to switch money between accounts at different institutions and paved the way for reoccurring payment systems such as Direct Debits which most loan companies and credit cards encourage today.

1981 | CitiBank, Chase Manhattan, Chemical and Manufacturers Hanover offer what we now know as online banking services for the first time. Using a terminal, keyboard and monitor, numeric tones can be sent down a telephone line in order to instruct financial transactions without needing to visit the branch.

1985 | Quicken Loans pioneer the online underwriting of mortgage and loan applications using one of the first underwriting algorithms. This early system formed the foundation for the online application systems used today by Very Merry Loans and direct lenders around the world.

1992 | The Money Shop debuts in the United Kingdom offering high street loans, pawnbroking, payday loan and cheque cashing services to the public. As of 2017, they have more 300 stores located across the country

1999 | One of the world's biggest finance comparison websites, MoneySupermarket, is launched. Originally focusing on mortgages, the site has now expanded to a range of other financial products with a 2016 revenue of more than £300m.

2001 | The British government announces the launch of the Financial Services Authority (2001). Whilst the board was appointed by the treasury, it would ultimately remain a completely separate entity from government control. The FSA was created to provide an independent regulatory body for the financial services industry, ensuring that consumer safety was placed at the heart of the lending business.

2005 | The world's very first peer to peer lender launches in the UK in the form of Zopa. This revolutionary new technology took advantage of the rapid rise in global internet from the past decade by bringing investors and potential borrowers together.

2008 | The global financial crisis occurs as a result of sub-prime mortgage lending in the USA, the growth of the housing bubble, easing credit conditions and deregulation. It led to the collapse of a number of the world's leading financial institutions including Lehman Brothers, Merrill Lynch and AIG, as well as many funds needing government bailouts to support their financial commitments.

2013 | The Financial Services Authority dissolves in the UK and is replaced by the Financial Conduct Authority. The FCA is charged with ensuring that all customers are treated fairly, encouraging innovation and healthy competition, and identifying potential risks to reduce the chance of further financial crises.

2013 | Very Merry Loans is launched in the UK, providing customers with a non-charging broker that believes in fair lending, customer data security and full around the clock support.