Creditor

Creditor summary:

• Creditors extend loans to borrowers, which are then repaid (often via a series of monthly payments).

• Creditors earn money on borrowing by charging interest. 

• Creditors decide whether to lend to a given consumer by evaluating their credit history. 

Creditor definition and meaning

A creditor may be a person or institution to whom money is owed. Creditors may include:

• Banks

• Credit unions

• Credit card companies

• Loan companies

• Businesses

• Individuals

A creditor loans money or extends credit and expects you to repay what you borrow, typically with interest. If you have a mortgage, your mortgage lender is the creditor. If you owe money on a car, the bank, credit union, or finance company that loaned the money is the creditor. If you have a credit card, the credit card company is the creditor. 

Key concept:

A creditor is a business or individual that loans you money with the expectation that you'll repay the loan as agreed. Often, payments are made in monthly installments. 

More about creditor

Creditors play an essential role in our economy by providing money to consumers so they can purchase the things they need. For example, without mortgage lenders, it would be nearly impossible for the average American to buy a home. Many of us depend on a lender to finance our vehicles. Without creditors, there would be no such thing as a traditional credit card. 

Creditor: a comprehensive breakdown 

Before extending credit, lenders judge a consumer's creditworthiness by relying on their credit score. Lenders may also consider other factors, including work history, income, and whether the loan is secured (with collateral) or unsecured. 

A creditor's goal is to earn interest on the money it loans. But for that to happen, the borrower must repay the loan as agreed. 

What happens if you don't pay as agreed? Creditors have the right to seek payment from you. Even so, there’s a law called the Fair Debt Collection Practices Act that protects you. Creditors may not:

• Harrass you. This includes using obscene language, threatening to hurt you, or calling more than seven times within seven days.

• Lie to you. For example, a creditor can't tell you that you owe a different amount than is owed or pretend to be an attorney. Creditors also can't tell you that you'll be arrested or say they're going to take legal action against you (unless it's true). 

• Treat you unfairly. Unless the original contract or law says they can, a creditor can't try to collect fees, interest, or other charges on top of the amount owed. Creditors can't deposit a post-dated check early and can't reveal your debts in public. 

You have the right to make debt collectors leave you alone. But asking them to stop contacting you won’t make the debt go away.