What is Credit? And what is it for?

What is Credit? And what is it for?

Credit is the trust that allows a party to provide money or resources to another party, when that second party does not repay the first party immediately (thereby generating a debt), but instead promises to pay or return those resources (or other materials of equal value) at a later date. In other words, credit is a method of making reciprocity formal, legally enforceable and extensible to a large group of unrelated people.

How Credit works for those in need.

The resources provided can be financial (for example, granting a loan), or they can consist of goods or services (for example, consumer credit). The credit covers any form of deferred payment. Credit is granted by a creditor, also known as a creditor or moneylender, to a debtor, also known as a borrower.

Most of the time, the exchange took place between those individuals who do not trust each other, for example, hostile or unknown tribes usually make their transactions through barter. On the contrary, members of the same tribe mostly settled their transactions on credit / debt.

Publicidade

Leave a Reply

Your email address will not be published. Required fields are marked *