ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The creditor (aka the lender) lends money or issues credit to the debtor (aka borrower). The debtor then has a contractual obligation to pay back the debt, often with interest. If the borrower fails to pay back the debt, the creditor might have legal recourse and the ability to take the debtor to court.

Detailed explanation-2: -A lender is an individual, a public or private group, or a financial institution that makes funds available to a person or business with the expectation that the funds will be repaid.

Detailed explanation-3: -According to the Consumer Financial Protection Bureau (CFPB), a creditor is “any person who offers or extends credit creating a debt or to whom a debt is owed.” A financial institution, individual or nonprofit could all be examples of creditors, so long as they lend money to another party.

Detailed explanation-4: -The term creditor typically refers to a financial institution or person who is owed money, though its exact definition can change depending on the situation. For example, if you have an outstanding balance on a loan, then you have a creditor.

Detailed explanation-5: -Creditors are individuals/businesses that have lent funds to another company and are therefore owed money. By contrast, debtors are individuals/companies that have borrowed funds from a business and therefore owe money.