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Credit is money given to you through some type of financial institution, like banks or credit unions. It is money that you have to repay with interest and sign a note obligating you to make regular periodic payments until a set final date.
Credit is made available as revolving debt through the use of credit cards. Revolving debt, like a line of credit, means that you have a set amount of money available. If you borrow against it, the amount available is reduced. As you make payments and pay down the debt, you increase the amount available up to your credit limit.
On the other hand, you may get an installment loan. You are given a set amount often to purchase a major item, like a car or house. You make regular payments on the loan until the debt has been satisfied.
|Sheri Ann Richerson|