In colloquial language, credit is often used as a synonym for loan when it comes to money.
The etymological origin of the word credit takes us back to the Latin creditum , which means "trusted thing." Therefore, the notion of credit appears linked to having trust.
A credit is an amount of money that is owed to an entity (for example, a bank) or a person.
Different uses of the term credit
In another sense, the term credit is used as a synonym for authority, fame or reputation : "The player still has credit to reverse the situation."
In the educational field, generally in universities, a credit is a unit of assessment of a subject , which is equivalent to a certain number of teaching hours: "I need 40 credits to be able to take that subject."
Likewise, the credits are the titles that mention the people who participated in the filming of a film or in the production of a television program. They usually appear at the beginning at the end of the broadcast. The place an artist occupies in the credits reflects their importance or fame; On the other hand, those with smaller stakes may not even appear in the titles.
A credit card allows you to make purchases and pay for them in the future.
Differences with a loan
It is very common for credit and loans to be confused, especially in those areas where there is no financial culture. However, it is necessary to explain that although for many people saying "I have to ask for a loan" or "I am going to ask for a loan" » is exactly the same, there are many differences between them , which we will explain below.
In a loan , the bank makes a fixed amount of money available to a client, which must be returned within a certain period of time, along with previously established interest . It is an operation that is carried out in the medium or long term and is amortized in regular installments that can be monthly, quarterly, semi-annual or annual . This way, the client can plan the way and installments in which he will return the money that was lent to him. In most cases, loans are granted to private clients for private use and, when signing the contract , certain requirements are requested, such as a guarantee or a real guarantee . Once this is signed, the loan will be entered into the account that the client already has and from the first day it becomes effective, interest begins to be calculated according to the amount that the bank has lent.
In the case of credits, the bank offers the client a credit account, in which the client can access the amount they need (with a maximum amount determined in the contract). In general, the way in which the client pays said credit is on a regular basis when the bank sends the settlement for the money used, to which the expenses and interest imposed by the entity are added.
Credit and interest
In both cases, money is lent and the person agrees to return it within a certain period of time and, also in both cases, the bank obtains its profits from the interest it imposes on the contract.
Finally, in both the first and second cases, the creditor (who grants the credit) has the right to demand and collect the money in the scheduled time and, in the event that the person does not comply with the payment , the creditor may take legal retaliation against him (such as suing him and taking him to trial).
Resource for consumption
There is a type of credit known as consumer credit and it consists of a loan offered by a financial institution to a person or company so that they can purchase goods or have a certain amount of money for a specific operation.
Some of the products that can be purchased through consumer credit are automobiles, furniture, appliances, entertainment accessories, computers, ornaments and decorative products, and also intangible goods such as travel or leisure activities.
It is worth mentioning that some organizations, such as supermarkets, propose joining a consumer account , where the customer obtains a credit card that will allow them to buy products from that place and pay in installments.