So if you remember episode 3.1 on the early history of money, credit is as old as civilization itself. The Sumerians had it. The Romans had it. Definitely not a new concept. But throughout most of history, credit was pretty unregulated by modern standards. If you could convince someone with cash to loan it to you, there you were. If not, out of luck. At the same time, if you had money to lend you could charge whatever interest you wanted as long as you could convince someone to sign on the dotted line.

Ancient Legal Codes

This is not to say that credit was entirely unregulated. A great many of the ancient legal codes involved credit, with the most obvious being the regulation of Jubilee or debt forgiveness years. The book of Deuteronomy specifies a 7 year period before debts were cancelled, but when you realize that the book of Leviticus loosens that up to 50 years, you can’t help suspecting that the financial sector had an effective lobby organization even then. Who knows whether it was enforced even at 50 years? The Code of Hammurabi has some helpful advice for debtors too, or at least for the family members of a debtor, for it says that “If a man is in debt and sells his wife, son, or daughter, or binds them over to service, for three years they shall work in the house of their purchaser of master; in the fourth year they shall be given their freedom” (Code of Hammurabi). Not sure I’d be too super grateful for that as the wife of a debtor, but there you are. Regulation. And Hammurabi did also cancel debts to the state four times during his reign. But still, this isn’t exactly government overreach. Nothing in the code of Hammurabi says women can’t be debtors. Neither does it help them to be so.

In theory, Roman women were mostly locked out of financial transactions, on account of their “lightness of the mind.” But as in other things, that varies according to the exact time, place, and circumstances, and in any case, the official histories written by men were not necessarily fully aware of what the women were up to. At least some Roman women got credit by borrowing from each other. At Pompeii, two wax tablets record the fact that the freedwoman Poppaea Note borrowed 1,450 sestertii from the rich woman Dicidia Margaris. Her collateral? Dicidia Margaris borrowed two slaves from her with the right to sell them if Poppaea Note did not pay her back. Voila credit. Also at Pompeii, a woman called Faustilla appears to have been running a predatory lending business, as women borrowed small amounts (15-20 denarii) with up to 45% annual interest. Ouch.

Medieval and Early Modern Europe

Women in medieval and early modern Europe also were both creditors and debtors. Now it is true that they don’t make a huge percentage of the high value loans, but they are not absent either. For example, in 1410 and 1414, Elizabeth de Clynton loaned large amounts of money to Warwickshire businesses in what appears to be venture capital. Beatrice Lavendar, a widow in London, spent six years as a successful financier, lending to male-owned nearby businesses. We know about this because the loans weren’t always repaid and these women sued (Dermineur, 29-30, 40). But the point is, they weren’t alone. Women as creditors used both their land and their dowries to generate money to lend out. Most of us, sadly, have more in common with the debtors than the creditors, so you may be interested to know that in the 1300s, women in Nottingham, Chester, and Winchester formed anywhere from 5 to 16% of the debtors brought to court (Dermineur, 84). So nothing like 50%, true, but hardly absent either. In general, widows are more involved than married or never married women. And also in general, when we look at just the low-value loans, the percentage of women involved goes up, suggesting that women weren’t using credit to found grand international businesses. Nope, they were just going about the business of life with the medieval equivalent of a credit card.

What would be different from today’s world is that both debtor and creditor likely lived nearby and likely saw each other regularly about town. So the decision of whether or not to lend wouldn’t be built on a trademarked credit score algorithm. It would rather be built on reputation, references from people you knew, and what the creditor can guess about your income from your house and your dress.

The Industrial Revolution and Beyond

The Industrial Revolution upset this balance a little. When crops began to be shipped all over the world, farmers would buy their goods at a local store on credit, expecting to pay their bill all at once after the harvest. Factory workers often had to buy their goods at a company store, so that their bill would be deducted from their wages (Card, 19). Since the prices were often ruinous, it really became a form of debt peonage from which a worker could never escape.

The more familiar modern forms of credit come from the automobile. Car makers wanted to sell more cars but many consumers could not afford the price all at once. Enter financing. In the 20s and 30s, bankers began to enter the consumer credit, especially after the Federal Housing Administration decided to back debts for home repair and modernization. After World War II, consumer credit exploded. In 1943, outstanding credit in the US was $6.1 billion. Six years later it was $20.3 billion. And it only continued to grow. Incomes were up, employment was high, and there was always plenty to buy. Urbanization was also a factor, since farms are usually at least partially self-sufficient with less need for cash than a city family which can produce almost none of the goods it needs. And then again the baby boom increased the need because younger people on average have fewer resources with which to buy the things they need, but they are usually a very good investment as they have so many working years ahead of them (Card, 20-21).

No Credit for Women

The growth of this credit system largely occurred while most women were outside the labor market, so the procedures weren’t geared towards them. Even for women who were employed, they were paid only 58% of men’s wages in 1968 (Card, 27), something which creditors naturally are concerned about.

So here are some common issues women faced when applying for credit in the early to mid-20^th century:

• If you are a single woman, you might be denied credit if you applied without the co-signature of a male relative. This was true even if you had a job and were supporting yourself. The rationale was that a single woman was obviously about to get married, at which point you will quit your job, have babies and default on your loan. Obviously.
• Or if you found a particularly enlightened bank, you might be able to get credit and establish a credit history, but if you then got married, all transactions would cease as far as your name was concerned and would be reported in your husband’s name, even if you were the original account holder and even if you were still working and paying the bills. Now, you might think that it doesn’t really matter, except that if you ever divorced or perhaps your husband died and needed credit in your own name, it suddenly turns out that you have no credit history. Financially, you don’t exist. As if you don’t have other problems to worry about in those circumstances. Some widows went to the trouble of concealing their husbands’ death, so as to keep the credit going. There was even a saying for it: “A dead man’s credit is better than a live woman’s” (Card, 28)
• Or perhaps you’re still married and applying for a mortgage jointly. If your income is going to figure into the discussion, then you might be required to submit a doctor’s note saying that you are sterile or on birth control and promise that you will continue to use it. Otherwise, only your husband’s income counts (Smith, 4).

So there’s a wealth of problems and assumptions here, and I didn’t even mention your chances if you happen to be a black woman.

For a specific case, let’s take a look at one woman named Emily Card. Card was a long way from being your average American woman. She held an MPA from Harvard and a Ph.D. in political science from Columbia University. In 1968, she was a young lecturer at the University of California. She was also married, but she was the breadwinner, as her husband was a full-time student and held no job at the time. The Bank of America had this nifty new thing called a BankAmericard, which you now know as a Visa card, so Emily Card went down to her local Bank of America and submitted her application, noting her job, her substantial earnings, and her marital status. Her application came back denied with a letter that said, and I quote: “Since you are married, we cannot give you an application in your own name. If your husband would like a card, we are enclosing an application for him” (Card, 4).

Right, so a UC lecturer doesn’t qualify but they are happy to have an application from a student with no income.

The Equal Credit Opportunity Act

The difference between Emily Card and the millions of other women who faced similar problems is that Emily Card saved the letter and she had options. Not that she got her card right away. Nope, but in 1973, it was her first day on the job as a Senate Fellow, and the National Commission on Consumer Finance published a 300-page report on the state of consumer credit in the country. The way this report is summarized in one law review of it I read, you get the impression that the 300 pages are all about women and credit, since it says that it concluded that there were “widespread instances of unwarranted discrimination in the granting of credit to women” (Burns).

According to Emily Card, in fact, only 2 out of the 300 pages discussed women’s problems, but it was nonetheless the first official acknowledgment that maybe things were not all fairness and logic and genuine risk analysis in the world of credit. Card approached Senator Bill Brock, Republican from Tennessee, about the issue. He agreed that in a world with increasing women entering the workforce, many were perfectly credit worthy but could not obtain credit. Emily Card began drafting some legislation, which Senator Brock sponsored (Card, 5).  Like any bill, it required a great amount of compromise and political foot shuffling prior to the vote. Women’s organizations and banking organizations and housing experts and all were called in and visited and coaxed. The American Banker’s Association was against it. Some provisions were relaxed and some women were upset about it. But it passed the Senate on July 23, 1973, 90-0, which I must say sounds truly outrageously bipartisan in the modern world. The Nixon White House and the Justice department got behind it. Interestingly, the Banking Subcommittee on the House side was led by Leonore Sullivan of Missouri, the only woman in Congress who didn’t want to support it (Card, 46). Emily Card sort of leaves us to believe that Sullivan was somehow against women having credit, but in fact, Sullivan’s complaint was just the opposite. She thought the bill’s credit discrimination provisions were too weak (Burns).

On the other side, was the credit industry. As one creditor wrote: “Any grant or denial of credit is by its very nature, discriminatory; that is, in order to survive economically, every credit grantor must discriminate between those whom he believes will pay their debts and those who will not” (Burns). All very true, but it missed an essential point: creditors are human beings and human beings are terrible at risk assessment. The assumption that a single woman was necessarily on the point of marriage was false, as was the assumption that a married woman was about to have children, as was the assumption that a mother would necessarily quit her job, as was the assumption that if that happened the bills would not be paid. As many feminists pointed out, and have been proved right, granting credit to women was an enormous business opportunity for creditors. They represented a significant expansion of the customer base for those very creditors.

The Equal Credit Opportunity Act was signed into law in 1974. It prohibited discrimination based on sex or marital status. In 1976, Congress amended it to include race, color, religion, national origin, and age (Card, 5).

So the lawmakers did their part, but of course, having the right to equal credit is just a piece of the problem. In 1979, one study reported that only 43% of women surveyed even knew that it was illegal for creditors to discriminate based on sex. Only 20% knew it was illegal to discriminate based on marital status. And obviously it’s difficult to exercise a right you don’t know you have.

Women and Financial Literacy

My local library still has on its shelves a delightful little book published in 1978 called New Credit Rights for Women. You can tell how much things have changed since its publication by the fact that the book has a $2.00 price printed on the front and that in the sample monthly budget, the authors chose $200 as a representative rent payment. So yes, prices have gone up just a titch. It also has a helpful picture of a Cash Dispensing Machine, in case you haven’t seen one, but mostly it gives a detailed explanation of how credit works and specific details of how to get it, why to get it, and how to recognize when you are being cheated. Sometimes, the level of detail seems almost comical, until you remember that even today people across the board, both men and women, are remarkably uninformed about finances. The most intriguing thing in the book, however, is that it suggests quite seriously that the easiest place to get a loan might be a feminist credit union which requires all its members to belong to a feminist organization or live in a household with one who does, and that if there is not a credit union where you live, your women’s organization should consider starting one, complete with an address where you can write for the rules and procedures to establish one. My mind boggles, quite honestly, but it shows how difficult it was for many women to get credit through ordinary means that you would even consider just starting your own credit union, which was certainly not a thought that had ever crossed my mind before (Smith, 18, 58).

Several years later Emily Card was interviewing Gloria Steinem for Ms. Magazine. Gloria Steinem was the founding member of the National Women’s Political Caucus, which helps get women elected. She helped establish the Take Our Daughters to Work Day. She was been outspoken and controversial on a number of women’s issues, and yet even she after all those experiences reported to Card that she had never seen her own credit report, that she had never bought a car or a house, and that in the home she had grown up in her father handled the money (and handled it badly, from the sounds of it). Her mother’s contribution to finances was to worry (Card, 8). So she had written and fought for women’s representation, employment, and a host of other issues, but had still inherited completely traditional gender roles with regard to money.

MicroLoans and More Credit for Women

The idea of allowing women more access to credit has gained popularity worldwide. In 1983, a Bangladeshi man named Muhammad Yunus founded a local bank in the village of 1983. In subsequent years, he made microloans to 7½ million borrowers, and almost all of them were women with no collateral, earning Yunus the title of founder of the microfinance movement. His borrowers mostly band together in a group of five women, called a koota. Each koota meets weekly and shares the responsibility for repaying the loans, thus spreading out the risk that one of them will hit on bad luck and default. The bank’s microloans have been calculated up to the tune of $3 billion dollars, and while he did have money from aid agencies, the bank did become completely independent and profitable (Ferguson, 279-280).

In 1990, Lynne Patterson and Carmen Velasco, founded Pro Mujer, a South American imitator of Yunus’s Bangladeshi bank. The borrowers at Pro Mujer may borrow as little as $200, but it allows them to buy livestock, sell tortillas, or open coffee shops. Predatory lending is nothing new in economically depressed areas, but the microfinance movement is attempting to correct that, and one of their strategies is to turn the age-old financial advice on its head. Popular wisdom among these groups and their borrowers is that women are actually more credit worthy than men. Men, these women claim, are more likely to spend their money on alcohol. Wives and mothers handle the money better (Ferguson, 279-280).

Whether that’s empirically true or not, I have no idea. But certainly, these women have proved that many women can and do pay back their loans when given the opportunity, regardless of whether they are married, have kids, or whatever.

According to Experian, one of the three major credit bureaus in the US, the average woman’s credit score is 704 which is just one insignificant point below that of men at 705. Apparently men have more credit card debt which surprised me, but women have more open accounts, which doesn’t surprise me. Overall men carry more debt in almost every category, and it is not clear to me whether that means women are managing their money better hence less need for debt or whether women are still facing some cultural barriers hence less access to debt, which is not the same thing at all. The one category where women have more debt than men is student loans, where we have 2.7% more. What joy!

Now I have recently seen a couple of young whippersnappers on Facebook post something about how boomers had it so easy because they didn’t have to worry about a credit score to get a mortgage. It is true that the credit score system is far from perfect and causes a lot of headaches for those who end up on the wrong side of it. However, I will point out that the credit score system is a LOT better than just a blanket ban on women getting a mortgage at all. And since I am neither a whippersnapper nor a boomer, I gotta say, the thing that blew my mind away while researching this issue is just how RECENT it is. My mother might well have been denied credit purely on the basis of her gender. So I called her and asked, and she wasn’t denied credit, but probably because she never applied until after she was married. The point is, if you’re a woman and you’ve got a credit card or a mortgage with your name on it, there are some boomer and pre-boomer women and legislators to thank for it.

Selected Sources

Here’s the code of Hammurabi, where we learn that selling off your family members to pay your debts is fine, but they only have to work for a few years. There’s also an interesting blog post on Roman women borrowing and loaning money from each other. The details of court cases in pre-industrial Europe come from Women and Credit in Pre-industrial Europe, edited by Elise M. Dermineur.

Staying Solvent : A Comprehensive Guide to Equal Credit for Women by Emily Card gave me the details of her experience of credit discrimination and the political fight for equal access in the US. And Sarah Lyn Smith’s New Credit Rights for Women was the delightful little gem that seriously suggested I start my own feminist credit union. Both are long since out of print, but still available in my local library.

And finally, as promised, check your own credit report! The three major American bureaus are: Experian, Equifax, and TransUnion. You do not need to pay anything to get your credit report once a year. It is a law that they must give it to you, so do not be bullied into paying for monitoring (unless you really want monitoring). Let’s exercise this right that women of the past fought for!