Personal or individual credit is the power of an individual to secure something* valuable in the present in exchange for a promise to pay in the future. Because personal credit is sought chiefly for purposes of consumption, it is sometimes called consumption credit; but it is used also to secure credit for purposes of production, to procure professional services of various kinds, and to borrow money. Of all kinds of credit, personal credit is the most common and widespread. All classes of people give or receive personal credit at some time and to some degree. Wage-earners extend credit to their employers by working for a day, a week or a month before receiving their pay; lawyers, physicians and other professional classes give credit to their clients or patients until the latter are ready to pay their bills; grocery stores and shops open "charge" accounts with their customers; manufacturers sell goods to wholesalers on "time," and these in turn sell to retailers on time, and so on. Personal credit ramifies through every department of our modern life. As Ave shall see, it is often very closely related to mercantile and banking credit. The chief elements in credit are character, capacity or business ability, and capital or collateral. Of these elements, character is the most important in personal credit. Multitudes of people without capital or known business ability are constantly getting credit because of the confidence which the extenders of credit have in their honesty and integrity.

The simplest of all forms of credit is book credit - having things "charged." In rural communities where the farmer's return for his crops is received only at long intervals, book credit, his credit at the country store, tides him over between harvests. In factory towns where wages are paid monthly or weekly, credit at the neighborhood shops supplies the family needs. In the large department stores, the monthly "account" obviates the necessity of making frequent payments, and facilitates shopping. It is estimated that book credit figures in fully one-half of the wholesale and retail transactions of this country to-day. Generally, book credit simply postpones payment until settlement day, when some other form of credit, usually bank credit in the form of a check, settles the account.