What Does The Term Credit Really Mean?

Everyone talks about credit but do you know what the term really means? Credit happens when one person or entity provides a loan, gives an asset or provides a service and does not receive payment immediately. Stephen Otto wrote an excellent article about Credit Cards vs. Charge Cards.

The person who provides the goods or funds is called the creditor. The person who receives the goods or funds is called the debtor. When the loan is given from the creditor to debtor the transaction is called credit. If you want to learn more about credit you can read the information provided by the FTC.