Creditor
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.