Credit and crediting Credit - transactions between two parties in which one
(the creditor or lender) supplies money, goods, services, or
securities in return for a promised future payment by the other
(the debtor or borrower). [Creditor is someone who money is
owed to. Debtor is someone who owes money.] Credit given is
an indication of trust in that person to pay for the goods given
or money lent. Credit transactions normally include the
payment of interest to the lender. Credit may be extended by
public or private institutions to finance business activities,
agricultural operations, consumer expenditures, or government
projects. Most modern credit is extended through specialized
financial institutions, of which commercial banks are the oldest
and most important. The lender must judge each loan he makes
on the basis of the character of the borrower (his intention to
repay), his capacity to repay (based on his potential for earning
income), and his collateral (property or other goods that you
promise to give someone if you cannot pay back the money
they lent you). [Loan is an amount of money that you borrow
from a bank.] Customers and lenders may publicly regulate the
terms of credit transactions to prevent abuses.
