Bank Credit
What it is:
Bank credit is an amount of funds that a person or business can borrow from a bank.
How it works (Example):
All kinds of things can be bank credit: mortgages, credit card accounts and even overdraft lines. Added together, this is bank credit.
The cost and terms of bank credit varies, depending on whether there is collateral involved, what competing banks are offering, and of course the borrower's creditworthiness.
Why it Matters:
Bank credit is a person's or business's total borrowing capacity in all forms with a bank. The quantity and cost of bank credit largely rests on the borrower's creditworthiness, though past relationships, current income and the use of funds are also factors.
