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Credit
as a financial term, used in such terms as credit card, refers
to the granting of a loan and the creation of debt. Any movement
of financial capital is normally quite dependent on credit,
which in turn is dependent on the reputation or creditworthiness
of the entity which takes responsibility for the funds.
A similar usage is in commercial trade, where credit is used
to refer to the approval for delayed payments for goods purchased.
Companies frequently offer credit to their customers as part
of the terms of a purchase agreement. Orgnaizations that offer
credit to their customers frequently employ a Credit Manager.
Credit is denominated by a unit of account. Unlike money (strict
definition) credit can not itself act as a unit of account.
Credit is also a traded market. The purest form is the "Credit
Default Swap" market which is essentially a traded market
in credit insurance, i.e. a credit default swap represents
the price at which two counterparties will exchange this risk
- the protection 'seller' takes the risk of default of the
credit in return for a payment, commonly denoted in basis
points (1/100 of a %) of the notional amount to be referenced,
while the protection 'buyer' pays this premium and in the
case of default of the underlying (a loan, bond or other receivable),
delivers this receivable to the protection seller and receives
from the seller the par amount (i.e. is made whole.)
creidit, cerdit, creidt, credti
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See:
• Business
Financing
• Credit
Score
• Credit
History
• Debt consolidation
• Creditor
• Bonds
• Credit Rating Agencies
See also
* Credit report
* Credit repair
* Installment credit
* Revolving credit
* Debt
* Interest
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This article is licensed under the GNU
Free Documentation License.
It uses material from the Wikipedia
article "Credit finance".
Also see:
• Having
Trouble Getting a Loan? Ten Common Credit Mistakes |
