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• What is the origin of the word "credit"?


  It is derived from the Latin word "credo".
• What does the term "credit" signify?


  It signifies trust or confidence reposed in another person.
• How is credit interpreted in economics?


  It is interpreted as trusting in the solvency of a person or lending money.
• What are the key characteristics of credit?


  • Confidence
  • Capacity
  • Security
  • Goodwill
  • Size of Credit
  • Period of Credit
• What are the main elements of credit?

  • Risk of Nonpayment
  • Timing
  • Security
• What are the functions of credit?


  • Economy in the use of money
  • Helpful to production
  • Expansion of bank credit
  • Benefits to consumers
  • Credit to the government sector
  • Stability
• How can credit be classified?


  • According to the status of the debtor
  • According to the time period
  • According to purpose
  • Public or private credit
  • Monetized or non-monetized credit
• What does public credit include?


  Grants of credit to governments at various levels.
• What does private credit refer to?


  Grants of credit to non-governments like individuals and corporations.
• What is secured credit?


  Credit that is backed by collateral such as land or assets.
• What is unsecured credit?


  Loans granted without security, based on the borrower's character.
• What are the different purposes of credit?

  • Commercial Credit
  • Agricultural Credit
  • Investment Credit
  • Consumer Credit
• What are the classifications of credit based on time period?

  • Short-term Credit
  • Medium-term Credit
  • Long-term Credit
• What is revolving credit?


  • Credit Cards: Borrow up to a limit and repay over time.
  • Home Equity Lines of Credit (HELOCs): Secured by home equity, borrow and repay repeatedly.
• What is installment credit?


  • Personal Loans: Lump-sum loans repaid over time.
  • Auto Loans: Loans for purchasing vehicles.
  • Student Loans: Loans for education expenses.
• What is secured credit?


  • Secured Credit Cards: Backed by a cash deposit.
  • Secured Loans: Backed by collateral like a car or home.
• What is unsecured credit?


  • Unsecured Personal Loans: Not backed by collateral.
  • Unsecured Credit Cards: Based on creditworthiness.
• What is business credit?

  • Business Credit Cards: Issued to businesses with tailored rewards.
  • Business Loans: Loans for business needs.
  • Trade Credit: Credit extended by suppliers.
• What is specialized credit?


  • Payday Loans: Short-term, high-cost loans.
  • Title Loans: Short-term loans using vehicle title as collateral.
• What does the "level of credit" refer to?


  • Credit Limits
  • Creditworthiness
  • Types of Credit
  • Credit Stages
  • Credit Utilization
• What is a credit card limit?


  The maximum amount you can borrow on a credit card.
• What is a credit score?


  A numerical representation of your creditworthiness, typically ranging from 300 to 850.
• What are the classifications of credit scores?


  Ranges include poor, fair, good, very good, and excellent.
• What are the types of credit?

  • Revolving Credit: Ongoing borrowing within a limit.
  • Installment Credit: Loans repaid over a fixed term.
  • Secured vs. Unsecured Credit: Requires collateral or not.
• What are the stages of credit?


  • Initial Credit: Beginning stage of credit history.
  • Established Credit: A track record of borrowing and repaying.
  • Prime Credit: High creditworthiness with favorable terms.
  • Subprime Credit: Lower creditworthiness with higher risk.
• What is the credit utilization ratio?


  It is the ratio of your credit card balances to your credit limits.
• What are innovative credit products?


  • Debit Cards
  • Credit Cards
  • Housing Loans
  • Auto Loans
  • Personal Loans
  • Educational Loans
  • Loans Against Securities
  • Consumption Loans for Durables
  • Hybrid Loan Products
• Who are the credit providers?


  • Banks: Licensed to take deposits and extend loans.
  • Credit Unions: Non-profit institutions owned by users.
  • Utility Companies: Provide services on a credit basis.
  • Pawnshops: Allow borrowing using collateral.
  • Government Agencies: Offer loan programs.
  • Licensed Moneylenders: Individuals or organizations with a credit license.
• What are ways to check your credit?

  • Payment History
  • Used credit vs. available credit
  • Types of credit card
  • New credit
• Why is credit important?


  • Enables economic transactions
  • Allows businesses to purchase necessary tools
  • Facilitates consumer purchases
• What are the 5 C's of good credit?


  • Character: Applicant's credit history
  • Capacity: Applicant's debt-to-income ratio
  • Capital: Amount of money an applicant has
• What does "character" refer to in the 5 C's of credit?


  It refers to the applicant's credit history.
• What does "capacity" refer to in the 5 C's of credit?


  It refers to the applicant's debt-to-income ratio.
• What does "capital" refer to in the 5 C's of credit?


  It refers to the amount of money an applicant has.
• Who can be described as a licensed moneylender?


  Any individual or organization who has obtained a credit license
• What are the ways to check your credit?

  • Payment History
  • Used credit vs. available credit
  • Types of credit card
  • New credit
• Why is credit important for consumers and businesses?


  It allows for efficient economic transactions and growth
• What might happen to a business that cannot borrow money?


  It may be unable to buy necessary machines and raw goods
• What are the 5 Cs of good credit?


  1. Character — the applicant's credit history
  2. Capacity — the applicant's debt-to-income ratio
  3. Capital — the amount of money an applicant has
  4. Collateral — an asset that can back the loan
  5. Conditions — the purpose of the loan and prevailing interest rates
• What are the roles of credit in financial markets?


  1. Facilitates Economic Activity
  2. Risk Management
  3. Economic Growth
  4. Price Discovery and Efficiency
  5. Financial Stability
  6. Credit Types and Instruments