Credit and debt

Definition

Credit is the ability to borrow money with the promise of future repayment, usually with interest. Debt is the amount of money owed. Understanding credit scores, interest rates, and responsible borrowing is essential for financial health.

Examples

  • A credit card allows purchases now with repayment later, plus interest on unpaid balances
  • Student loans are a common form of debt used to finance higher education
  • A credit score (300–850) determines a borrower's likelihood of repaying debt
Key Fact

FICO credit scores range from 300 to 850; 670+ is generally considered 'good' credit.

Related Terms

Interest rates Saving and investing Budgeting Functions of money

Study This Concept

Practice credit and debt with free review games in these units:

Economics Unit 7: Personal Finance