Question

what is a credit? what is collateral?

Answer 1

Credit is the trust which allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately, but instead promises either to repay or return those resources at a later date. 

Collateral is property or other assets that a borrower offers a lender to secure a loan. The day all the loan is paid off by the borrower is the day the home will no longer be collateral, and the lender won't have any rights to the asset.

Answer 2

Credit is the trust which allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately, but instead promises either to repay or return those resources at a later date. 

What is Collateral

Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses. Since collateral offers some security to the lender should the borrower fail to pay back the loan, loans that are secured by collateral typically have lower interest rates than unsecured loans. A lender's claim to a borrower's collateral is called a lien.

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