What’s Credit

Credit is the ability to borrow money.

Lenders, also called creditors, are willing to lend because they expect to get their money back and make a profit. Different types of lenders - such as banks, investment companies, credit unions, and even the federal government - provide different types of credit.

You're the borrower. You qualify for credit if lenders consider you creditworthy. That means lending to you isn’t too risky. When you borrow, you promise to repay the amount of money you use within a certain period of time, plus a fee for using the money. If you don't meet your legal obligation to repay what you owe on time, you'll pay penalties and face other problems.

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