Creditor

Creditors are the entities which give some type of credit to a borrower or debtor.  A creditor could a company, person, organization, government, a bank, a corporation or a credit card issuer.  In many of the cases where a creditor provides services to the debtor, there is the probability of some kind of payment to be delivered base on the terms and conditions agreed upon by both the parties.

There are several different examples of how the creditors work. For instance, some would only extended credit card or lend money privileges if there is some kind of asset offered or property by the borrower.  Usually   called as secured loan or credit, this approach helps to reduce the risk to the entity or individual which is providing the credit or loan, because there is always the choice of laying claim to the pledged asset during the time that the borrower fails to pay the loan amount according to the loan agreement or contract. Other creditors prefer to not entail the pledging of some kind of asset in exchange for giving a credit or loan to the borrower. This concept is generally called as unsecured loan or credit. In this situation, the creditor has a lot of details in order to indicate there is an adequate amount of confidence which the debtor would repay the full amount of the debt in a appropriate manner.  Most of the credit cards are issued on this basis and some of the personal loans as well. In many of the cases, the creditor and debtor both commit to a contractual agreement so as to create the lending relationship. A usual contract would include provisions which clearly explain the rights and responsibilities of both parties about the business deal.

Questionnaire:

• What is creditor?
• Give an example of creditor?