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
Real-world.
- 1 A credit card allows purchases now with repayment later, plus interest on unpaid balances
- 2 Student loans are a common form of debt used to finance higher education
- 3 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.