A creditor is any institution or individual that lends another party money or extends them a line of credit.

Similar to private equity, private credit is part of the private markets world. Both strategies offer illiquid, privately negotiated investments for privately held companies. Unlike private equity investors, however, private credit investors typically do not take ownership stakes in the companies they invest in.

Other types include opportunistic credit, special-situations credit, mezzanine finance, venture debt, infrastructure debt, real estate debt, and more. All of these sources of capital technically create private transactions, so they can all call themselves private credit.

Card issuers give customers credit cards, set rate limits, and collect payments. Card networks, on the other hand, dictate where credit cards can actually be used by managing relationships between the network and merchants. These networks make money on interchange fees, which merchants pay to accept a specific card network at their stores.

Sovereign credit ratings work like national credit scores, measuring a country’s ability and willingness to repay its debt. Moody’s, S&P, and Fitch are the major agencies assigning these ratings, which influence borrowing costs and investor confidence.

Direct lending, the most common subtype of private credit, typically involves senior loans which are secured by a company's assets. "Junior capital," on the other hand, is a type of private credit that is not secured by a company's assets, making it generally riskier than direct lending.

A lien is a legal claim or right to someone else's property, such as a home. For instance, if someone wins a lawsuit against you and they can’t immediately collect the money you owe them, they might have the right to file a lien against your property.

A mortgage is a loan used to buy property, like a house. Borrowers typically put down a percentage of the cost of the home, and the amount left over is financed through a lender, like a bank.

Like private equity fund managers, private credit managers typically raise funds directly from investors, lending to corporations. The borrowers can benefit from the lack of middlemen and resulting efficiency, and the lenders often yield comparatively higher returns.

Bonds are fixed-income investments allowing individuals to lend a specific amount of money to a large entity, like a government or corporation, for a set amount of time in return for interest paid out over the life of the loan. The bond market is widely considered a key economic barometer.

Before the creation of the modern banking system, the majority of loans were negotiated directly between the lender and the borrower—effectively making them private credit transactions.

Proponents of credit unions often point to the fact they’re not-for-profit cooperatives instead of for-profit businesses as a key selling point. This explainer dives into what this looks like in action—instead of pocketing the profits from interest rates, credit unions reinvest that money into the products and services they offer. For customers, this tends to create a more personal and community-oriented experience.

Some credit card issuers also take your other payment obligations into account when determining your credit limit, such as the cost of your rent or alimony.

Risks in private credit investing include the industry's lack of transparency and the ability of businesses to borrow more than a bank might allow against their debt. Some borrowers in early 2026, for instance, likely did not expect interest rates to be so high for so long, which could be contributing to an uptick in defaults.

These bonds offer investors regular interest payments in addition to the return of the principal amount at maturity. They allow companies to raise capital without losing ownership.

Chapter 7 is for liquidating personal assets to clear debts, Chapter 13 allows a repayment plan for individuals, and Chapter 11 lets businesses reorganize to stay afloat.

Businesses have credit scores the same way individuals do—with a few key differences. For one thing, business credit scores range from 0 to 100 instead of 300 to 850, and are based on factors such as bankruptcy and bill-paying habits.

Debt traps can be caused by unforeseen expenses or inadequate savings and can be a brutal cycle to break. At the end of 2025, total household debt in the US reached $18.8T, according to data from the Federal Reserve of New York.

Homeowners typically refinance to secure a lower interest rate and potentially a new loan term length. Debt owed on mortgages made up about 70% of US consumer debt as of 2025.

In the 1700s US economy, consumer credit reporting wasn't necessary. A loan to a farmer for agricultural supplies, for instance, would inevitably help them purchase both personal and business items.

The technical term for what happens when a court removes a debtor’s obligation to repay money owed is “discharge.” An “automatic stay” is what goes into place once a filing occurs to prevent a debtor from facing lawsuits, evictions, and other negative consequences until the process wraps up.

Some buy now, pay later services do a soft credit check rather than a hard credit check, like credit card companies would do when someone applies for a card. While hard credit checks can impact your credit score, soft pulls typically do not.

Borrowing money to buy a house has been a global practice since the Romans in the fifth century BCE. But before the mortgage, there was the “dead pledge,” which labeled the property as “dead” to the borrower until they paid off their loan to the lender.

Each type has variations of its bond offerings with different interest rates, loan lengths, maturity dates, and terms. Each type also carries its own risks and rewards.

They also profit from interchange fees, the fee the retailer has to pay the credit card network in order to facilitate a transaction. The fee is typically between 1% and 3% of the transaction amount.

Some common reasons for someone's credit limit being lowered include missed payments, an inactive account, and more.

Before authorizing a purchase, card issuers consider whether or not the cardholder has a high enough available credit limit to make the purchase, where the purchase is being made in order to reduce fraud, and more.

It's easy to let your credit score slip without realizing it. Checking your credit score and getting to know what's on your credit report are the first steps to getting to the "700 club," or "good score" range, according to one financial expert.

This US Treasury page explains what the national debt is, how it accumulates from annual deficits, and why rising debt can affect interest costs, fiscal flexibility, and long-term economic stability.

The nonbank financial intermediaries that make up the shadow banking system legally provide services that are similar to those of traditional commercial banks. Although the term isn't used as often as it once was, private credit firms are technically part of the shadow banking system, as are hedge funds, payday lenders, buy now, pay later companies, and more.

To do big things, people often need more money. Banks jumpstart economic activity with loans paid back with interest, and when things are working well, both people and the bank make more money. Formed in the Middle Ages amid competing currencies in Italy, banks—from the Italian for bench, banco—helped stimulate that era's commercial revolution, a massive expansion in Mediterranean trade and development. Find out the ins and outs of banks in this quick explainer video.

However, the bankruptcy process does not apply to several types of common debt, including money owed toward child support or alimony payments. Most debtors also do not qualify for relief from student loan payments.

For every dollar that a cardholder spends on a rewards credit card, they can also receive benefits such as cash back, airline miles, and more. For many, rewards are the reason they make so many purchases on credit cards in the first place.

Americans owe more than $1T to credit card companies. And with rising interest rates that prevent cardholders from paying down debt (not to mention the rising cost of living), that number is likely to keep growing. A podcast episode explains how the US got here, and what policymakers and individuals can do about it.

While student loans can impact your credit score, that's not necessarily a bad thing. Repaying the loan on time can strengthen your credit score, whereas paying late can hurt it. To find out more about how student loans can impact your credit score, read this article.

When a city needs to build a school, a road, or a water treatment plant, it usually issues a municipal bond—borrowing money from investors to be paid back over time. The market for these bonds now exceeds $4T.

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Consumer loans for agriculture were likely first used around 3500 BCE, but modern consumer credit took many more centuries to be established. England's credit reporting system, for instance, dates back to the early 1800s when a group of English tailors began swapping information about customers who failed to settle their debts.

US consumer debt nationwide totaled $17.9T as of 2024 Q3. Mortgage debt ranked as number one, with student loan debt coming in at number two.

Laws regulating predatory lending are called usury laws and vary from state to state. Payday lending has historically been exempt from some states' usury laws, and some lenders have found loopholes in state laws or business structures that allow them to provide short-term loans with high interest rates.