Financial Dictionary -> Loans -> Creditor

Any person or business that sells goods, offers a service that they charge money for or gives credit, loans or money is considered a creditor; and therefore anybody that buys goods, pays for services or borrows credit, a loan or money is a debtor to the creditor. In other words they owe them or are in debt to them. Most creditors are compensated right away, for example when somebody buys a loaf of bread, although in a mortgage for example the debt is repaid over several years. There is a similar term in law. When a person has a money judgment entered on their behalf by a court, they are named a judgment creditor. The actual term creditor has evolved from the idea of credit and is the opposite of debit, which is taking away.

Credit itself refers to the money loaned, or the ability of an individual or company to borrow money (aka “I can get credit”). Credit is also used to refer to positive cash deposits in a bank account; for example, an account may be “credited” with new funds or interest.

The word creditor is most commonly used in financial dealings and not by the everyday man on the street. It is especially used when referring to things like short term loans, long term bonds, and mortgages. Businesses often refer to their suppliers as creditors.