Credit
Credit is a financial term that refers to the ability to borrow money or receive goods or services in exchange for future payment. Credit is typically extended by a lender, such as a bank, credit union, or other financial institution, to a borrower. The borrower then agrees to repay the loan, plus interest, over a specified period of time. Credit can also refer to the amount of money available to a borrower, which is typically based on their credit score. Credit is an important part of the economy, as it allows individuals and businesses to purchase goods and services that they may not be able to afford upfront.
History of Credit
The concept of credit has been around for centuries. In ancient times, merchants would extend credit to customers in exchange for goods or services. This allowed customers to purchase items they needed without having to pay for them upfront. In the modern era, credit has become an integral part of the economy. Banks and other financial institutions offer credit to individuals and businesses in the form of loans, credit cards, and other financial products.
Comparison of Credit Types
| Type of Credit | Interest Rate | Repayment Period |
|---|---|---|
| Personal Loan | 6-36% | 1-7 years |
| Credit Card | 10-30% | 1-2 years |
| Home Equity Loan | 4-6% | 15-30 years |
Summary
Credit is an important financial term that refers to the ability to borrow money or receive goods or services in exchange for future payment. Credit is typically extended by a lender, such as a bank, credit union, or other financial institution, to a borrower. The borrower then agrees to repay the loan, plus interest, over a specified period of time. Credit can also refer to the amount of money available to a borrower, which is typically based on their credit score. For more information about credit, visit websites such as Credit Karma, Experian, and TransUnion.
See Also
- Debt
- Interest Rate
- Credit Score
- Credit Report
- Credit Card
- Loan
- Mortgage
- Secured Loan
- Unsecured Loan
- Line of Credit
