Origin (etymology) of CREDIT
Middle French, from Old Italian credito, from Latin creditum something entrusted to another, loan, from neuter of creditus, past participle of credere to believe, entrust — more at creed.
First Known Use: 1537
Related to CREDIT
Synonyms: trust
Antonyms: disbelief, discredit, doubt, nonbelief, unbelief
Definition of Credit
A A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date.
2)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g. granting a loan), or they may consist of goods and services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender to a debtor also known as a borrower.
Base on the ORIGIN and DEFINITION of CREDIT above we can derive the following ELEMENTS of Credit::
- Two–party contract. The 2 parties are the borrower (debtor) and the lender (creditor)
- Presence of Trust. Implies that the creditor has faith in the ability and willingness of a debtor to fulfill obligations.
- Time of Payment. Borrower has an obligation to pay debt at a definite time or date.
One thing worth mentioning though (not taken up above) is CREDIT entails
4. 4. Risk. Creditors are always at risk when they extend credit and this is the risk of DEFAULT or NON-PAYMENT.
