What Is Consumer Credit?

"Credit" is an arrangement to receive cash, goods, or services now and pay for them in the future. Consumer credit refers to the use of credit for personal needs by individuals and families as contrasted to credit used for business or agricultural purposes.

Although Polonius cautioned, "Neither a borrower nor a lender be," using and providing credit have become a way of life for many individuals in today's economy. Consumer credit is based on trust in the consumer's ability and willingness to pay bills when due. It works because people, by and large, are honest and responsible.

Related Resources

Types of Credit: Closed or Open-End

Borrowing Money and Managing Credit

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